Rite Aid on Thursday reported that fourth quarter revenues from continuing operations fell 8.6% or $509.1 million to $5.4 billion, down from $5.9 billion in the prior-year quarter. Its retail pharmacy segment revenues fell 10.1% to $4.0 billion, partly because of an extra week in last year's fourth quarter, but also due to a decline in same store sales. Revenues in pharmacy services fell 4.3% to $1.4 billion, due to a decline in commercial business and changes in its composition of Medicare Part D membership.
Same-store sales from continuing operations in retail pharmacy for the quarter fell 1.7% over the prior year, which included a 2.3% decrease in pharmacy sales and a 0.6% decrease in front-end sales.
For the year ended March 3, revenues from continuing operations fell $1.4 billion or 6.1% to $21.5 billion, down from $22.9 billion in the prior year. Retail pharmacy segment revenues fell 5.6% to $15.8 billion, primarily as a result of the extra week in the prior year and a decline in same-store sales. Same-store sales from continuing operations for the year fell 2.9%, consisting of a 3.9% decrease in pharmacy sales and a 0.8% decrease in front end sales, the company said.
Rite Aid recent trouble with lackluster sales continued in the fourth quarter, but with two new parents — Walgreens and Albertsons — executives expect to turn around soon.
The drugstore retailer expects full-year 2019 sales of between $21.7 billion and $22.10 billion, more or less besting the average analyst estimate of $21.73 billion cited by Reuters.
On Feb. 20, Rite Aid and Albertsons entered into a definitive agreement for a merger. The boards of both companies have approved the transaction and the deal is expected to close early in the second half of this calendar year. In his statement on Thursday, Rite Aid Chairman and CEO John Standley said the deal will "transform Rite Aid into a truly differentiated leader in food, health and wellness."
The combined Albertsons and Rite Aid company will be renamed, according to Food DIve, and operate around 4,900 stores and 4,300 pharmacies, along with 320 clinics. Albertsons' pharmacies will be rebranded under the Rite Aid name.
Rite Aid has also sold 2,000 locations to Walgreens — nearly half its stores — after the rivals ditched their merger plans last year, and this sale is farther along. But it entails the closure of some 600 stores, mostly Rite Aid locations, and related assets. Still, part of that deal is an opportunity for Rite Aid to become a member of Walgreens Boots Alliance’s group purchasing organization, giving it broader power to negotiate drug prices. That will help the company achieve stronger sales in coming months.
"We are pleased that we've been able to drive improved operational performance through a stabilization of reimbursement rates, improvements in drug purchasing costs and a record number of immunizations which helped us deliver a higher pharmacy margin for the quarter," Rite Aid President and Chief Operating Officer Kermit Crawford said in a statement Thursday. "These areas of our business will continue to be key priorities as we begin our new fiscal year and work together to continue building momentum."