Rite Aid crushed earnings estimates for its third quarter 2020, but said it still has “important work ahead” and will reveal its comprehensive strategy soon. However, the drugstore retailer did reveal a few of its digital plans.
"While we are pleased with these results, we have important work ahead of us to put our company on a path to long-term sustainable growth,” Rite Aid Corp. CEO Heyward Donigan said in a press release. “We will soon reveal our comprehensive strategy that revitalizes Rite Aid retail pharmacies as fresh and relevant, leveraging the trust and expertise of our pharmacists in meeting the unique health and wellbeing needs of our communities.”
Rite Aid reported net income of $52.3 million for the quarter, compared to a net loss of $17.3 million during the same period a year earlier. Adjusted earnings per share (EPS) of $0.54 were substantially higher than analyst projections of $.07 per share. It also surpassed Wall Street expectations with revenue of $5.46 billion, up slightly from $5.45 billion and ahead of a projected $5.42 billion.
Going forward, the retailer said its marketing strategy will undergo dramatic changes.
“We are rapidly modernizing our digital and omnichannel consumer engagement infrastructure, as a key part of that strategy,” said COO Jim Peters on the company’s recent earnings call. “We are going to give consumers what they want, when they want it, regardless of where they are.”
Rite Aid is executing a plan for digital personalization, reducing reliance on printed circulars and reviewing its customer loyalty program, he said.
“These foundational steps will better optimize marketing investments, provide rich consumer insights and help us to acquire new customers. And already we are seeing promising preliminary results from initial campaigns supporting flu shots, for example.”
Rite Aid’s digital sales have been growing over the past few quarters, with a 69% increase in Q3, driven by digital refills.
Rite Aid is releasing a new online and mobile solution, which Peters said will fully personalize and streamline consumer experience, although he did not provide a timeline for the launch.
“These efforts are critical to securing the loyalty of the next generation of Rite Aid customers,” he noted. “A new approach to pharmacy merchandising and marketing, it means that our consumers will expect compelling in-store and digital experiences.
Rite Aid plans to differentiate its stores in the months and years to come, including reimagining its drive-throughs, enhancing its delivery services and introducing new pickup experiences like pay-and-go and buy-online-pickup-in-store.
“These experiences will be supported by investments in technology to completely modernize our digital capabilities and provide a seamless omnichannel experience throughout the pharmacy and front-end,” he said. “In terms of ongoing initiatives, we were early adopters for Amazon counter and locker, and we will very soon offer an Amazon pickup solution at every Rite Aid store.”
In addition, self-checkout is available in 100 stores throughout New York City and Los Angeles, and the retailer plans to rollout self-checkout to 200 additional stores during the first half of 2020.
Rite Aid said its fiscal 2020 capital expenditures are expected to be $230 million, concentrated on prescription file buys and investments in technology to drive growth.
“As you can probably sense, our direction has changed course 180-degrees,” said Peters. “We are focused on our bright future with renewed energy and optimism. We are an independent entrepreneurial company with hungry battle ready associates and I assure you, we're not going to wait around and let others dictate our future.”