Rite Aid expands Wellness+ program, Wellness stores in Q2
CAMP HILL, Pa. — Rite Aid increased sales and narrowed losses in second quarter 2012 as its Wellness+ loyalty card program continued to grow and its new Wellness store format saw continued expansion.
The company reported sales of $6.3 billion, a 1.8% increase over second quarter 2011's $6.2 billion. Losses were $92.3 million, compared with $197 million in the same period last year.
The Wellness+ program had 44 million members, compared with nearly 40 million in first quarter 2012. In a conference call with investors Thursday, president and CEO John Standley said Wellness+ silver members had basket sizes 55% larger than nonmembers, while gold members had basket sizes 128% larger.
Overall, members accounted for 69% of front-end sales and 66% of script count, while almost 90% of members shopped both sides of the store, and 50% visited the stores each week.
"We continue to attract new customers with the program, and we watch their behavior as they come in," Standley said.
Next week, the chain plans to introduce Wellness+ Diabetes, a collaboration with WebMD and the first Wellness+ program extension. The program will provide members with free lifestyle management tools and other resources, Standley said.
The Wellness store format has seen significant growth as well and now includes 40 stores in eight markets on the east and west coasts. The company has set aside $92 million for store remodels and plans to expand the format to 300 stores next year.
"Our new Wellness format is all about empowering our customers in pursuit of wellness," Standley said.
So far, the new format has performed well.
"We are seeing improved sales results in the first group of remodeled stores," CFO Frank Vitrano said.
At the same time, Standley said Rite Aid would not be expanding the co-branded Rite Aid/Save-A-Lot stores beyond the original 10 stores it operates under a partnership with Supervalu. Nevertheless, he said, "We still like the grocery concept and think it could work in some of our stores."
The 4,697-store chain now has more than 11,000 pharmacists trained to perform immunizations and has immunized 364,000 people against the flu as of this summer, with a goal of immunizing 1.5 million next year.
Standley also commented briefly on the proposed merger between Express Scripts and Medco Health Solutions and how it might solidify pressure on pharmacy reimbursement rates over time. "It's certainly not going to help," he said.
Same-store sales for the quarter increased by 2.2% over second quarter 2010, including a 2.5% increase in front-end sales and a 2% increase in pharmacy sales.