Quarterly results from No. 3 pharmacy chain Rite Aid Corp. (NYSE:RAD) and Walgreen Co. (NYSE:WAG) give us a chance to update the three-way race among the country's largest drugstore chains.
As we detailed in a magazine column in May, this one is a
corporate strategy classic. Each of the three contenders is using a mix of acquisitions, organic growth and moves into adjacent businesses (like in-store clinics and pharmacy benefits management) to seek advantage against a backdrop of retail challenges and regulatory change.
On Wednesday, restructuring Rite Aid, still a distant third,
posted its eighth-straight quarterly loss as it continues to absorb the 1,800 Brooks Eckerd stores it bought in 2007. But because the $98.4 million loss was a bit smaller than expected, analysts gave them credit for making progress.
The day before, Walgreen
said net income for its fiscal third quarter fell 8.7%, to $522 million, because of restructuring costs and merchandise markdowns.
The leader, CVS Caremark Corp. (NYSE:CVS), last reported on May 6, and the news was good. Profits for the quarter were down slightly, to $738 million, but as The Wall Street Journal reported there was
evidence that its 2007 purchase of PBM giant Caremark, a $27 billion deal, was paying off. -
Kenneth Klee
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Juergen Lasowski
And the winners are...
CVS is the clear leader in this segment, with RA really playing catch-up and Walgreens being pinched in between CVS and Walmart. Walgreens has announced an iniative to upgrade their stores, which is long overdue, which might help them create greater differentiation.