Key Rite Aid revenue metric slips in October
CAMP HILL, Pa. (AP) — Rite Aid Corp.'s revenue from established stores slid 1.1 percent in October, as cheaper generic drugs pinched pharmacy sales again and countered the drugstore operator's business gains from Superstorm Sandy.
The Camp Hill, Pa., company said Thursday that pharmacy revenue from stores open at least a year fell 2.3 percent, even though the prescription count climbed nearly 5 percent compared to October 2011. The company cited the introduction of new generic drugs.
Rite Aid, Walgreen Co. and other drugstore operators have seen their pharmacy revenue fall this year due to the introduction of generic equivalents to popular brand-name drugs like the cholesterol fighter Lipitor.
Generic drugs hurt revenue because they cost less than brand-name alternatives. But they help drugstore earnings because they offer a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
Rite Aid also said Thursday that revenue from the front end, or rest of the store, increased 1.5 percent last month at stores open at least a year. The company attributed most of that to customers stocking up on supplies before Sandy battered the East Coast.
Revenue from stores open at least a year is considered a key indicator of retailer health because it leaves out results from locations that have opened or closed in the last year.
Total revenue for the four-week period that ended Oct. 27 fell nearly 2 percent to $1.92 billion.
Rite Aid said Sandy's aftermath will hurt its results in November. The company had 188 stores that were either closed or operating with no power as of Wednesday, and it is trying to re-open the stores as quickly as possible.
Rite Aid operated 4,637 stores as of Oct. 27. It is the nation's third-largest drugstore chain, trailing only Walgreen Co. and CVS Caremark Corp.
Shares of Rite Aid fell 2.6 percent, or 3 cents, to $1.13 in midmorning trading Thursday.