Rite Aid Corporation (NYSE: RAD) turnaround is going on well, going by the impressive third-quarter financial results that affirm growth in the core business amid the COVID-19 shocks. The better than expected financial results came amid solid performance in the retail pharmacy and pharmacy service segment.
Booming Pharmacy Business
While the COVID-19 pandemic has taken a toll on the company’s businesses in some ways, such as hurting Halloween candy sales, it has also given rise to new opportunities. For starters, the pharmaceutical giant continues to enjoy high front end store sales as people stock immunity-boosting products to counter coronavirus.
However, unlike the previous year, the company could struggle to generate the same sales as part of the cold cough and flu season. Covid-19 has caused a significant reduction in customer traffic to stores expected to hurt sales heading into the New Year.
Looking forward, Rite Aid could receive a boost once COVID-19 vaccinations become rampant. The vaccinations are expected to ease fears, which should lead to an uptick in store traffic come to 2021.
ImpressiveQ3
Amid the challenges heading into 2021, Rite Aid continues to fire on all angles depicted by the stock rallying by more than 20% on third-quarter financial results topping estimates. Revenue in the quarter climbed 12% to 6.12 billion, attributed to growth from retail pharmacy. Adjusted earnings came in at 40 cents a share above expectations of 2 cents a share.
Same-store sales were up 4.3% on big pharmacy sales, which helped offset a decrease in sales in the front end of Rite Aid’s store locations. Buoyed by the stellar performance in the third quarter, the company has since raised its full-year guidance.
For the full year, Rite Aid expects revenues of between $23.9 billion and $24.2 billion, which translates to a 9% year–over–year increase on the lower end. After initially powering to one-year highs, the stock has faded but still above where it started in 2020 at. The positive guidance is one of the catalysts likely to continue fuelling the upward momentum.