Fred’s Pharmacy sees progress in specialty pharmacy sales

MEMPHIS, Tenn. — Fred’s Pharmacy saw total sales for the month of January decline 5.6% year over to $148.1 million from $156.9 million. Comparable-store sales for the month decreased by 4.8% versus an increase of 0.7% during the prior year period.

As for its 2016 fourth quarter, total sales for the fourth quarter of 2016 decreased 4.3% year over year to $530.7 million from $554.6 million in the fourth quarter of 2015. On a comparable-store basis, Q4 sales decreased 3.6% versus an increase of 1.7% in the year-earlier period.

Fred’s also announced total sales for fiscal year 2016 ended Jan. 28 decreased 1.1% year-over-year to $2.126 billion from $2.151 billion in fiscal year 2015. On a comparable-store basis, fiscal 2016 declined 2.2% versus an increase of 1.5% for the year-earlier period.

However, Fred’s enjoyed one silver lining: specialty pharmacy.

"We are pleased to report that comparable sales for our specialty pharmacy business trended positive in January 2017, reflecting the success of initiatives we have implemented over the past year to offset the industry-wide slowdown in Hepatitis C drugs and diversify our specialty offering,” said Fred’s CEO Mike Bloom.

(To read the recent Drug Store News interview with Fred’s CEO Mike Bloom about his vision for the company as it is poised to grow, click here.)

“The progress we made in specialty pharmacy was offset in retail pharmacy by the effects of winter weather events, a slow cold and flu season, and continued reimbursement pressure. In our front store, we experienced softer sales related to continuing challenges that we have discussed previously, such as issues related to transitioning several key categories to a third-party distributor, the impact of reduced SNAP benefits, unseasonably warm weather, and intense competitive conditions," Bloom said about January sales. “Additionally, we encountered a new, but transitory challenge in January: the delay of refunds for taxpayers receiving an earned income tax credit or an additional child tax credit, which we believe disproportionately affected our customers and, as a result, discretionary sales throughout our store. However, these refunds should be released on February 15, which we anticipate will have a favorable impact on February sales. Outside of competitive challenges, we estimate the impact of other front store issues reduced January comparable sales by approximately 2.4%.

Added Bloom: "We continue to take a long-term view of our business and the opportunities ahead as a significant provider of healthcare services and value merchandise in the markets that we serve," Bloom added. "Our confidence in this new vision remains firm, as does our enthusiasm for the potential we see to grow sales, traffic and profits, and in turn, drive higher returns for our shareholders."

Fred's Pharmacy and subsidiaries currently operate 644 discount general merchandise stores and three specialty pharmacy-only locations in 15 states in the southeastern United States. Included in the store count are 16 franchised locations. Also, there are 362 full-service pharmacy departments located within Fred's stores, including three franchised locations.