Rite Aid on Wednesday reported that third quarter revenues from continuing operations rose to $5.5 billion from $5.4 billion in the prior year's quarter. Same-store sales from retail pharmacy continuing operations in the quarter rose 1.6% year over year, including a 1.5% decline in front-end sales, according to a company press release.
Net loss from continuing operations in the quarter narrowed to $17.3 million from $18.2 million a year ago, the company said. Adjusted net income from continuing operations rose to $14.7 million from last year's third quarter adjusted net income in that metric of $8.5 million, thanks to expense reductions.
On Tuesday the drugstore retailer announced that Justin Mennen has been named senior vice president and CIO, reporting to CFO and Chief Administrative Officer Darren Karst, according to another press release. Mennen arrives from CompuCom Systems Inc., where he was chief digital officer and CIO, the company said.
As with rivals CVS Health and Walgreens, Rite Aid is focused on its pharmacy and healthcare operations, which kept store comps in the black, although, also like those rivals, the retailer has sought to elevate its front-of-store position through enhanced beauty sales.
"In terms of front-end strategy, we continue to prioritize health, beauty, vitamins and consumable as key categories that drive top line growth and improve the customer experience," COO Kermit Crawford told analysts Wednesday, according to a conference call transcript from Seeking Alpha. "We remain focused on customizing our assortment to be relevant in every store, while enhancing our multicultural assortment and introducing more better-for-you items and brands."
Those introductions include an exclusive offering of cruelty-free indie beauty brand Kokie and popular lines e.l.f. and Cake Beauty, sold through more than 2,300 Rite Aid stores and at riteaid.com, with more to come, he said. The company has also revamped its grocery sales in some stores, which is going well, according to Crawford.
The retailer is also escalating its omnichannel capabilities, CEO John Standley said, including a new tie-up with Instacart, which recently severed its partnership with Whole Foods. A letter of intent has been signed by Rite Aid and launch of the service is planned for next spring.
Rite Aid has developed a wellness store concept, now operational in 1,748 wellness stores, about 70% of the store base, according to Karst. The stores that have been remodeled in the past 24 months are performing about 87 basis points higher than non-wellness stores, he told analysts.
Thanks to a mostly complete refinancing of a $2.7 billion senior secured credit facility scheduled to expire in January of 2020, the retailer has bought some time. A new $2.7 billion senior secured asset-based revolving credit facility and a new $450 million senior secured asset-based term loan facility are now expected to mature in 2023, Karst said.