Rite Aid Corp.
said it saw a 37% decline in sales of items related to colds and the flu during the fourth quarter, thanks to safety precautions taken to combat the COVID-19 pandemic.
“This decline was greater than we anticipated and was, of course, driven by everyone continuing to mask up and also certainly from kids not being back socializing at school,” said Heyward Donigan, Rite Aid chief executive, on last week’s earnings call, according to FactSet. The sales decline also put the squeeze on margins.
Rite Aid wasn’t the only pharmacy retailer to report a sharp decline in cold-and flu-related items during the quarter. Walgreens Boots Alliance Inc.
also said its comparable sales fell in the most recent quarter due to the milder cold and flu season.
CVS Health Corp.
which said at the end of February that it would initially administer about 250,000 COVID immunizations across 11 states as part of President Joe Biden’s vaccine program, expects to eventually reach millions of new customers as it administers COVID-19 vaccines. That company has steadily expanded the number of locations where the vaccine is available.
Rite Aid also experienced a 14% sales decline in prescriptions related to elective procedures, doctor visits and other “acute” areas due to the pandemic.
Rite Aid reported fourth-quarter revenue that beat expectations. For March and the first half of April, Rite Aid said it administered 2 million COVID-19 vaccine shots.
“COVID-19 vaccine administration a key tailwind in early FY22,” wrote JPMorgan analysts in a Rite Aid note. “As we look beyond the near-term vaccine benefit, the focus will shift to execution on the turnaround strategy, and we will continue to monitor the ongoing progress.”
JPMorgan rates Rite Aid stock neutral with a $21 price target.
Rite Aid stock has gained 15.6% for the year to date, outpacing the S&P 500 index
which is up 10.7% for the period.