Report: Rite Aid primed for growth in fiscal 2016

NEW YORK — Rite Aid's 5.5% lift in same-store sales for the four weeks ended Oct. 25 exceeded analyst consensus of 4%, Credit Suisse research analyst Ed Kelly reported in a note Thursday. 

 

"Script growth accelerated to 4.9%, helped by Medicaid expansion and higher flu shot activity vs. last year," he noted. "The front-end comp of 2% was in-line but continues to be encouraging given competitive challenges and weak staples retail performance generally."

 

And Rite Aid's results should get better on a go forward, Kelly noted, given the growth in generics, traffic gains driven by the Affordable Care Act and purchasing savings out of the chain's relationship with McKesson. And as Rite Aid continues to grow the ratio of stores that have undergone a Wellness remodel, that will provide a slight tailwind behind comp performance as well, Kelly noted. 

 

Rite Aid reported total drug store sales of $2.1 billion, an increase of 5% for the four week period. Pharmacy comparable sales were up 7.1%.