Walgreen Company (WAG), Rite Aid Corporation (RAD): This Stock Keeps Falling Behind

Page 1 of 2

On Thursday morning, Rite Aid Corporation (NYSE:RAD) reported another month of lackluster sales results. For March, same-store sales were down 2%, whereas top competitor Walgreen Company (NYSE:WAG) reported a 0.7% increase in comparable-store sales. (The third pharmacy giant, CVS Caremark Corporation (NYSE:CVS), does not report monthly sales.) Walgreen is continuing to recover strongly from last year’s dispute with Express Scripts Holding Company (NASDAQ:ESRX), and the company appears to be winning market share back from Rite Aid. As a result, I expect Rite Aid’s recent return to profitability to prove short-lived.

Rite Aid Corporation (NYSE:RAD)The details
Rite Aid Corporation (NYSE:RAD)’s sales decline last month was comprised of a 3.8% increase in front-end sales and a 4.5% decrease in pharmacy same-store sales. Much of the decline can be explained by the introduction of various new generic drugs in the past year; generics are cheaper than brand-name drugs, but carry higher margins for pharmacies. It is perhaps more meaningful to look at prescription count, which does not differentiate between brand-name and generic drugs. On that basis, Rite Aid reported a modest 0.3% increase over the prior year.

On the other hand, Rite Aid Corporation (NYSE:RAD) estimated that front-end comparable-store sales benefited by 300 basis points due to the calendar shift of Easter into March. Stripping out all of the moving parts, it appears that Rite Aid’s core sales growth is less than 1%, well below the pace seen for much of the last year.

Competition heats up
Much of Rite Aid Corporation (NYSE:RAD)’s improved performance last year was a direct result of the commercial dispute between Walgreen Company (NYSE:WAG) and Express Scripts, which forced Express Scripts customers to fill their prescriptions elsewhere. While it is difficult to quantify the benefit seen by Rite Aid Corporation (NYSE:RAD) (and other Walgreen Company (NYSE:WAG) competitors), Rite Aid’s management has admitted that pharmacy sales were boosted by the dispute last year. However, as of Sept. 15, 2012, Walgreen’s stores began to accept Express Scripts prescriptions again, and the company has a made a strong push since then to regain lost customers.

Whereas Rite Aid Corporation (NYSE:RAD)’s prescription count in comparable stores increased by just 0.3% last month, Walgreen Company (NYSE:WAG)’s stores saw a 4% increase. Walgreen’s management also commented that “the percentage of former Express Scripts customers returning to its pharmacies continued to increase in March.”

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!