This past week Camp Hill, PA based drugstore Rite Aid held its First Quarter Fiscal 2013 Conference Call the call included: Matt Schroeder – Group Vice President of Strategy & Investor Relations and Treasurer; John T. Standley – Chairman of The Board, Chief Executive Officer, President and Member of Executive Committee and Frank G. Vitrano – Chief Administrative Officer, Chief Financial Officer and Senior Executive Vice President
John Standley – Chairman of The Board, Chief Executive Officer, President and Member of Executive Committee gave an overview of the business as well as a Private Brand update highlighting a 2.3% increase over the prior year’s first quarter Private Brand penetration.
We continue to make strong progress, thanks to a company-wide focus on executing key sales initiatives, taking good care of our customers and operating more efficiently. As a result, we have now grown same-store sales and adjusted EBITDA for 6 consecutive quarters, and I would like to take this opportunity to thank our entire Rite Aid team for their hard work in driving these positive results.
During the quarter, same-store sales increased by 2.5% over the prior year period, including a 2.7% increase in the front end and a 2.4% increase in the pharmacy. Prescriptions sold at same stores increased by 3%, which is primarily due to additional prescriptions resulting from the Walgreens/Express Scripts dispute. Adjusted EBITDA for the quarter increased $11.3 million from the prior year’s first quarter to $274.2 million. The increase in adjusted EBITDA was driven by our strong top line results and an improvement in pharmacy gross margin, partially offset by a $20.9 million charge to settle certain class-action lawsuits. The improvement in pharmacy gross margin was the result of new generic drugs that have come to market in the past several months, which have increased our generic drug penetration by over 3% to 79%. This improvement was partially offset by pharmacy reimbursement pressure.
Net loss for the quarter decreased by nearly $35 million compared to the prior year period and improvement driven by a higher adjusted EBITDA and decreases in depreciation and amortization expenses and lease termination impairment charges. We also ended the quarter with over $1.1 billion in liquidity, giving us ample resources to operate our business.
He went on to discuss Private Brands:
As noted during our last call, we recently completed the conversion of more than 2,900 items to our new Rite Aid brand architecture. During the quarter, customers continue to respond positively to our new package designs and new brands. Private brand penetration increased to 17.9%, a 2.3% increase over the prior year’s first quarter penetration.
SOURCE: Seeking Alpha
Christopher Durham
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