Rite Aid targeting net new store growth for the future

NEW YORK - Rite Aid is headed toward a full-fledged growth mode, John Standley, Rite Aid chairman and CEO, told analysts at the 2015 Citi Global Consumer Conference Thursday afternoon. The company had opened its first net new store in five years this past March, and Standley promised there would be plenty more net new stores in the chain's future as Rite Aid fills out those markets where it is decidedly understored. 

 

"We have an effort underway to rebuild our real estate pipeline," Standley said, noting that the company will continue to invest in remodels and file buys, "but we're also going to ramp up store relocations ... and we're also going to begin opening net new stores as we go forward." 

 

Standley reported that Rite Aid has a number of existing markets where there are fill-in opportunities. "There are a number of markets where we're No. 3 in marketshare, and the reason we're No. 3 is we're No. 3 marketshare in store counts," he said. The idea is if Rite Aid is able to better saturate some of those markets, it's going to raise the performance bar for all of the stores in that market. "Markets where we are No. 1 or No. 2, we are very profitable in," Standley said. "They're very successful markets for us."

 

"Once we work our way through that opportunity, which will take us a couple years, we will begin to look at net new markets over time. But early priorities are relocations and fill-ins where we have some great growth opportunities. I'm pretty excited about ramping up these store growth opportunities," Standley said. 

 

Of course, to ensure the success of those net new stores, Rite Aid will need to fill those stores with patients. And while the company will be turning to traditional means to leverage those new store investments in the form of prescription file buys, Rite Aid has another patient generator that will be put into play when it closes the deal (possibly in the next 60 days) on its acquisition of PBM EnvisionRx. "We ... think there is a really exciting opportunity to just organically grow EnvisionRx," Standley said. "Today it does about $5 billion in revenues, but by combining EnvisionRx with the Rite Aid brand, we think it's going to give it much broader national exposure than it has received in the past."

 

That creates a virtuous circle. "As we grow the assett, obviously, Rite Aid should over time gain access to more customers and patients, which is another synergy that pops out of this combination," Standley added.