Rite Aid’s total sales expected to plunge 31% in first quarter
Rite Aid (RAD), which will report fiscal first quarter 2019 results on June 27, is projected to report a 31.6% YoY (year-over-year) decline in total sales to $5.3 billion. However, last year’s sales numbers also include revenue from the 1,932 stores that have now been sold to Walgreens Boots Alliance (WBA).
How the company has performed recently
Rite Aid’s total sales from continuing operations declined 6.1% YoY to $21.5 billion during the fiscal year ended March 3, 2018. A decline in comparable prescription growth, a fall in reimbursement rates, and a reduction in front-end sales comps drove the company’s top line down. The company missed consensus top-line expectations in three of the four reported quarters.
The company witnessed a deterioration in sales in both of its business segments during the year. The Retail Pharmacy segment, which includes prescription drugs, health and beauty products, and personal care items, contracted 5.6% YoY. Same-store sales from continuing operations fell 2.9% during the year.
The Pharmacy Services segment, which mainly focuses on PBM (pharmacy benefit management) services, witnessed a deterioration of more than 7.8% YoY. This decline was primarily driven by a contraction in the commercial business due to the company’s decision to participate in fewer Medicare Part D regions.
ETF investors seeking to add exposure to Rite Aid can consider the SPDR S&P Retail ETF (XRT), which invests 1.4% of its portfolio in the company.
In the next article, we’ll discuss the company’s profitability and margin expectations.