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COMPANY PROFILE

Rite Aid Corporation

REFERENCE CODE: F938EC6A-DAF1-4276-A734-EBDE91918A9A


PUBLICATION DATE: 31 Jan 2014
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Rite Aid Corporation


TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
Business Description...........................................................................................4
History...................................................................................................................5
Key Employees.....................................................................................................8
Key Employee Biographies................................................................................10
Major Products and Services............................................................................15
Revenue Analysis...............................................................................................16
SWOT Analysis...................................................................................................17
Top Competitors.................................................................................................23
Company View.....................................................................................................24
Locations and Subsidiaries...............................................................................27

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Rite Aid Corporation


Company Overview

COMPANY OVERVIEW
Rite Aid Corporation (Rite Aid or the company) is a retail drugstore chain operator engaged in
selling prescription drugs and other merchandise. The company operates 4,623 drug stores in 31
states across the US and in the District of Columbia. It is headquartered in Camp Hill, Pennsylvania
and employed 89,000 people, including pharmacists and part-time employees, as of March 2, 2013.
The company recorded revenues of $25,392.3 million in the financial year ended February 2013
(FY2013), a decrease of 2.8% compared to FY2012.The operating profit of the company was $646.7
million in FY2013, compared to the operating profit of $161.9 million in FY2012. The net profit was
$118.1 million in FY2013, compared to the net loss of $368.6 million in FY2012.
The company's financial year ends on the Saturday closest to February 29 or March 1. FY2013 was
a 52-week period and FY2012 was a 53-week period.

KEY FACTS
Head Office

Rite Aid Corporation


30 Hunter Lane
Camp Hill
Pennsylvania 17011
USA

Phone

1 717 761 2633

Fax
Web Address

http://www.riteaid.com

Revenue / turnover 25,392.3


(USD Mn)
Financial Year End

February

Employees

89,000

New York Ticker

RAD

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Rite Aid Corporation


Business Description

BUSINESS DESCRIPTION
Rite Aid is a drugstore chain operator in the US engaged in the sale of prescription drugs, health
and beauty aids, personal care products, seasonal merchandise and a large private brand product
line. As of March 2, 2013, Rite Aid operated 4,623 drug stores in 31 US states and in the District of
Columbia.
The company primarily operates through the retail drug segment. The company sells prescription
drugs and a wide assortment of other merchandise called front-end products.
Rite Aid offers different types of front-end products, including over-the-counter (OTC) medications,
health and beauty aids, personal care items, cosmetics, household items, beverages, convenience
foods, greeting cards, seasonal merchandise, and other everyday convenience products, as well
as photo processing services.
The company offers a range of products under the Rite Aid private brand. Rite Aid has an alliance
with GNC Holdings, Inc. (GNC) under which Rite Aid opened more than 2,100 GNC stores-within-Rite
Aid-stores to co-market a line of vitamins and nutritional supplements called PharmAssure. GNC
is a large retailer of vitamin and mineral supplements, personal care, fitness and other health-related
products.
The average selling area of each Rite-Aid store is 10,000 square feet, while the average total area
of each store is 12,600 square feet. The stores in western US are generally larger in size than the
ones located in eastern US. The stores in western US average 19,400 square feet in size while
those in eastern US average 11,100 square feet. Approximately 61% of Rite Aid's stores are
freestanding (single retail outlets) and around 52% include a drive-thru pharmacy. Around 47% of
stores include a GNC store-within-Rite Aid-store.
In addition to the above, the company offers prescription refills and other products over the internet
through www.riteaid.com. Further, the company has also installed automated pharmacy dispensing
units that are linked to its pharmacists' computers that fill and label prescription drug orders.
Rite Aid also owns or leases distribution centers and satellite distribution locations in several parts
of the US. It also owns a 55,800 square feet ice cream manufacturing facility and leases a 32,000
square feet storage facility located in El Monte, California.

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History

HISTORY
The first store of Rite Aid was opened in 1962 as Thrif D Discount Center in Scranton, Pennsylvania.
The company grew through acquisitions and by opening new stores, and by 1965 it had expanded
to five states. It was named Rite Aid Corporation in 1968. Rite Aid also made its first public stock
offering that year and started trading on the American Stock Exchange. In 1970, Rite Aid started
trading at $25 per share on New York Stock Exchange.
By 1972, Rite Aid operated 267 stores in 10 American states. Rite Aid continued to grow thereafter,
becoming the largest drugstore chain in the US in 1987 in terms of store count, with 2,000 stores in
operation.
Rite Aid acquired Perry Drug Stores, the largest drugstore chain in Michigan, in 1995. In the following
year, the company expanded its services to the West Coast through the acquisition of Thrifty PayLess
Holdings, the largest drugstore chain in the western US. Soon after, Rite Aid entered the Gulf Coast
region with the acquisitions of Harco and K&B Incorporated, and added 332 stores to its portfolio.
The company expanded its operations in the year 1998 with the acquisition of PCS Health Systems
(PCS), one of the major pharmacy benefits management companies in the US. In 1999, Rite Aid
formed a strategic partnership with GNC, the largest specialty retailer of vitamins, mineral
supplements, sports nutrition and herbal products. This partnership created GNC stores within Rite
Aid drugstores. Rite Aid and GNC also created and co-marketed a new line of vitamins and nutritional
supplements called PharmAssure. Increasing its presence on the internet, Rite Aid partnered with
the internet pharmacy drugstore.com in 1999, offering online health, beauty and pharmacy products.
Rite Aid sold PCS to Advance Paradigm, an independent provider of health improvement services,
in 2000. In the following year, the company expanded its product range by signing agreements with
The Coca-Cola Company and Kodak, under which Rite Aid agreed to offer products from these two
companies in its stores.
In 2002, the company announced the launch of 411: Hair Info, an exclusive salon style hair care
line, at its retail stores nationwide. In 2004, Rite Aid announced that each of its pharmacies nationwide
would accept Medicare Approved Discount Cards. In the same year, the company opened its first
Customer World store design. Rite Aid purchased Shelly's Pharmacy, a regional retail pharmacy
chain in Philadelphia, during 2005. During the same year, the company opened seven stores in the
greater New Orleans area.
Rite Aid entered into an agreement with Sutter Health in the year 2006 to open Sutter Express Care
medical clinics inside six Rite Aid stores in Sacramento.
In 2007, the company signed an exchange agreement with Longs Drug Stores to acquire six Longs
stores in Washington, Oregon and northern California, and prescription files from an additional six
stores in Washington and Oregon. Rite Aid acquired 1,854 Brooks and Eckerd stores and six

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History

distribution centers from The Jean Coutu Group in 2007, creating the largest drugstore chain on the
East Coast and significantly strengthening its position as the third largest US drugstore chain. In the
same year, Rite Aid extended its partnership with GNC to add 1,125 GNC LiveWell store-within-a-store
locations inside Rite Aid stores by the end of 2014.
In 2008, Rite Aid terminated operations of 28 Rite Aid stores in Las Vegas, Nevada. In the same
year, the company signed an agreement to sell patient prescription files of 27 stores in the Las Vegas
metro market to Walgreen. Also in the year, Rite Aid and FUJIFILM USA, a market leader in providing
complete retail photo imaging solutions, announced an all-inclusive imaging solutions agreement.
Under the terms of the agreement, Fujifilm would provide a comprehensive range of photography
solutions, including online and in-store photofinishing services and consumer photo products, to Rite
Aid.
Drugstore.com, an online retailer of health, beauty, vision and pharmacy products, and Rite Aid
announced a restructured strategic relationship in 2008, which included the launch of a new Rite
Aid online store for OTC products. In the same year, Rite Aid warned its shareholders that if the
price of its stock does not improve, the company's shares could be delisted from the NYSE. The
move would require Rite Aid to repurchase or refinance some of its debt (convertible notes), which
could require additional financing. Further in 2008, the company introduced a free Rx Savings Card,
which provides cost savings on over 10,000 prescription drugs and over 1,500 OTC medicines to
patients with limited or no insurance.
In 2009, the company entered into an agreement to sell seven Rite Aid stores in San Francisco and
five Rite Aid stores in eastern Idaho to Walgreen. Rite Aid voluntarily recalled two of its products
containing peanuts due to potential salmonella contamination in the same year. The company
launched its exclusive Rx Suncare line of products and its M5 Magnum five-blade shaving system
in 2009. The year also witnessed the closure of Rite Aid's 255,000 square feet distribution center in
Bohemia, New York. Furthermore, Rite Aid received a notice from the New York Stock Exchange
that it regained compliance with the exchange's share price listing requirement in 2009. The company
closed its distribution center in Newnan, Georgia later that year.
Rite Aid launched its new private brand baby care line Tugaboos in 2010. In the same year, Rite
Aid and Save-A-Lot, a SUPERVALU company, announced a licensing agreement to add the discount
and limited assortment grocery store concept to Rite Aid's 10 existing stores in the Greenville market.
The stores would be co-branded Save-A-Lot Food Stores/Rite Aid Pharmacy under Rite Aid
ownership. Two such stores were opened in Greer and Travelers Rest, South Carolina in 2010.
In mid-2011, Rite Aid's private brand Thrifty Ice Cream announced a new lineup, including new
flavors and varieties such as the brand's first ever nonfat frozen yogurt and take-home pint containers.
Later in the year, Rite Aid joined the Diabetes Prevention and Control Alliance (DPCA), an initiative
aimed at reducing the number of diabetes, prediabetes and obesity cases. Rite Aid will support
patients enrolled in the DPCA program to help control their diabetes. Around the same time, Rite
Aid and OptumHealth (a part of Optum, a health services company) introduced NowClinic Online
Care services in select Rite Aid pharmacies in the greater Detroit area. NowClinic offers Rite Aid

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History

customers real-time access to medical care, information and resources from doctors and OptumHealth
nurses.
Thrifty Ice Cream announced six new flavors including two Greek-style nonfat frozen yogurts in
2012. In the same year, Rite Aid selected CaptureRx as its preferred 340B technology vendor and
administrator. Through CaptureRx, Rite Aid will provide contract pharmacy services to distribute
340B-priced drugs to patients of eligible community health centers and hospitals nationwide. Rite
Aid launched a mobile app for android and iPhone smartphones in the same year. The app offers
prescription refill scanning, locations and features of the nearest Rite Aid stores, and weekly sale
and promotion listings.
Rite Aid announced a new Load2Card feature for its wellness+ loyalty program members in 2012.
This feature automatically loads special rewards earned by customers to their wellness+ cards. In
the same year, Rite Aid launched a new Exclusive Deals tab on its Facebook page, which gave
customers expanded coupon offers available exclusively through Rite Aid social media channels.
Towards the end of 2012, the company introduced fitness expert Denise Austins new line of home
fitness products, Forever Fit, at Rite Aid stores nationwide.
Rite Aid expanded NowClinic Online Care services to 58 additional Rite Aid pharmacies in Baltimore,
Boston, Philadelphia and Pittsburgh in March 2013. In the following month, the company launched
the new Riteaid.com, which was redesigned to provide visitors with easier access to Rite Aid's online
pharmacy services, health and wellness information, Rite Aid's online store, and savings among
others.
Rite Aid launched wellness65+, an extension of its wellness+ customer loyalty program, in June
2013. Rite Aid customers 65 and older who enroll in the program will be automatically eligible for an
expanded wellness65+ pharmacist consultation. In addition, members of wellness65+ will also
receive the same rewards and benefits as that of wellness+.

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Key Employees

KEY EMPLOYEES
Name

Job Title

Board

John T . Standley

Chairman and Chief Executive


Office

Executive Board

Michael N. Regan

Lead Independent Director

Non Executive Board

231154 USD

Joseph B. Anderson

Director

Non Executive Board

206154 USD

Bruce G. Bodaken

Director

Non Executive Board

David R. Jessick

Director

Non Executive Board

Kevin E. Lofton

Director

Non Executive Board

Myrtle S. Potter

Director

Non Executive Board

Marcy Syms

Director

Non Executive Board

216154 USD

Ken Martindale

President and Chief Operating


Officer

Senior Management

4236021 USD

Frank G. Vitrano

Senior Executive Vice President,


Chief Financial Officer and Chief
Administrative Officer

Senior Management

4306118 USD

Tony Bellezza

Senior Vice President and Chief


Compliance Officer

Senior Management

Don P. Davis

Senior Vice President and Chief


Information Officer

Senior Management

Douglas E. Donley

Senior Vice President and Chief


Accounting Officer

Senior Management

Susan Henderson

Senior Vice President and Chief


Communications Officer

Senior Management

Enio Anthony Montini, Jr.

Executive Vice President,


Merchandising

Senior Management

Marc A. Strassler

Executive Vice President, General


Counsel and Secretary

Senior Management

Robert I. Thompson

Executive Vice President, Pharmacy Senior Management

Robert K. Thompson

Executive Vice President, Store


Operations

Senior Management

Jerry Cardinale

Senior Vice President, Indirect


Procurement

Senior Management

Christopher Hall

Senior Vice President, Pharmacy


Services

Senior Management

David Kelly

Senior Vice President, Store


Development

Senior Management

John Learish

Senior Vice President, Marketing

Senior Management

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Compensation
7839282 USD

216154 USD

1670160 USD

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Rite Aid Corporation


Key Employees

Name

Job Title

Wilson A Lester, Jr

Senior Vice President, Supply Chain Senior Management

Daniel Miller

Senior Vice President, Pharmacy


Operations

Ken Black

Group Vice President,


Senior Management
Compensation, Benefits and Shared
Services

Ernie Richardsen

Group Vice President,


Pharmaceutical Purchasing and
Clinical Services

Senior Management

Matt Schroeder

Group Vice President, Strategy,


Investor Relations and Treasurer

Senior Management

Karen Smith

Group Vice President, Real Estate

Senior Management

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Board

Compensation

Senior Management

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Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES


John T . Standley
Board: Executive Board
Job Title: Chairman and Chief Executive Office
Since: 2012
Age: 50
Mr. Standley has been the Chairman of the Board at Rite Aid since 2012 and the Chief Executive
Officer since 2010. He served as the President at the company from 2008 to 2013. He was the Chief
Operating Officer at Rite Aid from 2008 to 2010. He also served as a Consultant to Rite Aid in 2008.
Previously, Mr. Standley served as the Chief Executive Officer and was a member of the Board of
Directors at Pathmark Stores from 2005 to 2007. He served in various roles at Rite Aid during
19992003 including Senior Executive Vice President and Chief Administrative Officer, Senior
Executive Vice President and Chief Financial Officer and Executive Vice President and Chief Financial
Officer. Earlier, he was an Executive Vice President and the Chief Financial Officer at Fleming
Companies. Mr. Standley also served as a Senior Vice President and the Chief Financial Officer at
Fred Meyer from 1998 to 1999, as a Senior Vice President and the Chief Financial Officer at Ralphs
Grocery Company from 1997 to 1998, as the Senior Vice President of Administration at Smith's
Food & Drug Stores from 1996 to 1997 and as the Chief Financial Officer at Smitty's Supervalue
from 1994 to 1996. Currently he serves as a Director at SUPERVALU.

Michael N. Regan
Board: Non Executive Board
Job Title: Lead Independent Director
Age: 65
Mr. Regan is the Lead Independent Director at Rite Aid. He was appointed a Director at the company
in 2007. Mr. Regan was the Chief Financial Officer at Indiana Downs, a race track and casino
complex, from 2012 to 2013. From 2007 to 2011, he was a self-employed private equity investor.
Prior to that, Mr. Regan served as the Chief Financial Officer at The St. Joe Company, a real estate
development company, from 2006 to 2007. From 1997 to 2006, he served as the Senior Vice
President of Finance and held various other positions at The St. Joe Company and was a member
of the senior management team. Prior to joining The St. Joe Company, Mr. Regan served as Vice
President and Controller at Harrah's Entertainment from 1991 to 1997.

Joseph B. Anderson
Board: Non Executive Board
Job Title: Director

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Key Employee Biographies

Since: 2005
Age: 70
Mr. Anderson has been a Director at Rite Aid since 2005. He has been the Chairman of the Board
and Chief Executive Officer at TAG Holdings since 2002. Mr. Anderson was the Chairman of the
Board and Chief Executive Officer at Chivas Industries from 1994 to 2002. He also serves as a
Director at Quaker Chemical Corporation, Meritor, Valassis Communications, and NV Energy (formerly
Sierra Pacific Resources).

Bruce G. Bodaken
Board: Non Executive Board
Job Title: Director
Since: 2013
Age: 61
Mr. Bodaken has been a Director at Rite Aid since 2013. From 2000 to 2012 he served as the
Chairman, President and Chief Executive Officer at Blue Shield of California. Mr. Bodaken also
previously served as the President and Chief Operating Officer at Blue Shield of California from
1995 to 2000 and as an Executive Vice President and the Chief Operating Officer from 1994 to 1995.
Prior to joining Blue Shield of California, he served at F.H.P., a managed care provider, in various
roles. Mr. Bodaken is currently a Director at WageWorks.

David R. Jessick
Board: Non Executive Board
Job Title: Director
Since: 2009
Age: 59
Mr. Jessick has been a Director at Rite Aid since 2009. From 2002 to 2005, he served as a Consultant
to Rite Aid's Chief Executive Officer and senior financial staff and was a Senior Executive Vice
President and the Chief Administrative Officer at Rite Aid from 1999 to 2002. From 1998 to 1999,
Mr. Jessick was the Executive Vice President of Finance and Investor Relations at Fred Meyer, and
from 1997 to 1998, he was the Chief Financial Officer at Fred Meyer. From 1979 to 1996, Mr. Jessick
held various financial positions including Executive Vice President and Chief Financial Officer at
Thrifty Payless Holdings. Currently he is a Director at DFC Global Corp. and Big 5 Sporting Goods
Corporation.

Kevin E. Lofton
Board: Non Executive Board
Job Title: Director
Since: 2013

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Key Employee Biographies

Mr. Lofton has been a Director at Rite Aid since November 2013. He has also been the President
and Chief Executive Officer at Catholic Health Initiatives since 2003. Mr. Lofton joined Catholic
Health Initiatives in 1998 and has held several leadership positions, including Chief Operating Officer.
Prior to joining Catholic Health Initiatives, Mr. Lofton served as the Chief Executive Officer at the
University of Alabama Hospital, as the Chief Executive Officer at Howard University Hospital and
as the Chief Operating Officer at University Medical Center. Currently, he also serves on the Board
at Morehouse School of Medicine, Conifer Health Solutions and Gilead Sciences.

Myrtle S. Potter
Board: Non Executive Board
Job Title: Director
Since: 2013
Ms. Potter has been a Director at Rite Aid since December 2013. She is currently the Chief Executive
Officer at Myrtle Potter & Co. and Myrtle Potter Media. Before forming her own consulting company,
Ms. Potter served as the President of commercial operations and Chief Operating Officer at
Genentech. She also held executive positions at Bristol-Myers Squibb and Merck & Co. Ms. Potter
currently serves on the Board at Liberty Mutual Holding Company, Proteus Digital Health, and
Everyday Health.

Marcy Syms
Board: Non Executive Board
Job Title: Director
Since: 2005
Age: 62
Ms. Syms has been a Director at Rite Aid since 2005. She was a Director at Syms Corp., a chain
of retail clothing stores, from 1983 to 2012, when she was appointed the President and Chief
Operating Officer. She became the Chief Executive Officer at Syms Corp. in 1998 and was appointed
the Chairperson in 2010. Ms. Syms is also a founding member of the Board of Directors of the Syms
School of Business at Yeshiva University. Currently, she serves as the President of the Sy Syms
Foundation and is also the Founder and President of the TPD Group

Ken Martindale
Board: Senior Management
Job Title: President and Chief Operating Officer
Since: 2013
Age: 54
Mr. Martindale has been the President and Chief Operating Officer at Rite Aid since 2013. He was
a Senior Executive Vice President and the Chief Operating Officer at Rite Aid from 2010 to 2013.

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Key Employee Biographies

From 2008 to 2010, he served as the Senior Executive Vice President, Merchandising, Marketing
and Logistics Officer at Rite Aid. Mr. Martindale was a self-employed private investor in 2008. He
served as the Co-President, Chief Merchandising and Marketing Officer at Pathmark Stores from
2006 to 2007. Mr. Martindale joined the Board of Directors at Intesource in 2000, became the
Chairman of the Board in 2004, and served as the President, Chief Executive Officer and Chairman
of the Board from 2004 to 2006. From 1999 to 2004, he was the Principal at Martindale Development
Group.

Frank G. Vitrano
Board: Senior Management
Job Title: Senior Executive Vice President, Chief Financial Officer and Chief Administrative Officer
Since: 2008
Age: 57
Mr. Vitrano has been a Senior Executive Vice President, the Chief Financial Officer and Chief
Administrative Officer at Rite Aid since 2008. He was a self-employed private investor in 2008.
Previously, Mr. Vitrano spent 35 years at Pathmark Stores, where most recently he served as the
President, Chief Financial Officer and Treasurer from 2002 to 2005 and as the Co-President, Chief
Financial Officer and Treasurer from 2006 to 2007. He was a Director at Pathmark Stores from 2000
to 2005.

Douglas E. Donley
Board: Senior Management
Job Title: Senior Vice President and Chief Accounting Officer
Since: 2005
Age: 50
Mr. Donley has been a Senior Vice President and the Chief Accounting Officer at Rite Aid since
2005. He was the Group Vice President and Corporate Controller from 1999 to 2005. He served as
a Financial Analyst at the company from 1996 to 1999. Mr. Donley was an Internal Auditor at Harsco
Corporation from 1994 to 1996. Prior to joining Harsco, he was an Auditor at KPMG Peat Marwick.

Enio Anthony Montini, Jr.


Board: Senior Management
Job Title: Executive Vice President, Merchandising
Since: 2011
Age: 60
Mr. Montini has been the Executive Vice President of Merchandising at Rite Aid since 2011. From
2010 to 2011, he served as the Senior Vice President of Category Management. Prior to that, from
2008 to 2010 he served as an Executive Vice President and the Chief Operating Officer at MARC

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Key Employee Biographies

USA, a privately held company. From 2005 to 2008, Mr. Montini was the Senior Vice President of
Operations at MARC USA, and from 2004 to 2005, he served as the Senior Vice President of Channel
Marketing at MARC USA.

Marc A. Strassler
Board: Senior Management
Job Title: Executive Vice President, General Counsel and Secretary
Since: 2009
Age: 65
Mr. Strassler has been Executive Vice President, General Counsel and Secretary at Rite Aid since
2009. From 2008 to 2009, he was a self-employed private investor. Previously, Mr. Strassler served
as Senior Vice President, General Counsel and Corporate Secretary at Pathmark Stores from 1997
to 2007. From 1987 to 1997, he served as Vice President, General Counsel and Secretary at
Pathmark.

Robert I. Thompson
Board: Senior Management
Job Title: Executive Vice President, Pharmacy
Since: 2009
Age: 59
Mr. Thompson has been the Executive Vice President, Pharmacy Operations at Rite Aid since 2009.
From 2008 to 2009, he served as the Senior Vice President, Pharmacy Operations at the company.
In 2008, Mr. Thompson served as the Senior Vice President, Northeast Division, and from 2007 to
2008, he served as the Vice President, Integration. From 2004 to 2007, Mr. Thompson was the Vice
President, Pharmacy Business Development.

Robert K. Thompson
Board: Senior Management
Job Title: Executive Vice President, Store Operations
Since: 2011
Age: 55
Mr. Thompson has been the Executive Vice President of Store Operations at Rite Aid since 2011.
From 2007 to 2011, he served as the Senior Vice President of the company's Western Division.
Prior to joining Rite Aid in 2007, Mr. Thompson was the Senior Vice President for the West Region
at Target Corporation where he served for nearly 20 years in various operational roles.

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Major Products and Services

MAJOR PRODUCTS AND SERVICES


Rite Aid is a retail drugstore chain operator engaged in selling prescription drugs and other
merchandise. The company's key products and services include the following:
Products and services:
Prescription drugs
OTC medications
Health and beauty products
Personal care items
Cosmetics
Household items
Beverages
Convenience foods
Greeting cards
Seasonal merchandise
Every day and convenience products
Photo processing services
Brands:
Rite Aid
PharmaAssure
Thrifty Ice Cream

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Revenue Analysis

REVENUE ANALYSIS
Overview
The company recorded revenues of $25,392.3 million in FY2013, a decrease of 2.8% compared to
FY2012. For FY2013, the US, the company's only geographic market, accounted for 100% of the
total revenues.
Rite Aid generates revenues through a single segment: retail drug segment. However, the company
reports its revenues based on four product categories: prescription drugs (67.6% of the total revenues
in FY2013), general merchandise and other (17.3%), OTC medications and personal care (9.9%)
and health and beauty aids (5.2%).
Revenues by product category
In FY2013, the prescription drugs category recorded revenues of $17,165.2 million, a decrease of
3.5% compared to FY2012.
The general merchandise and other category recorded revenues of $4,392.9 million in FY2013, a
decrease of 0.5% compared to FY2012.
The OTC medications and personal care category recorded revenues of $2,513.8 million in FY2013,
a decrease of 1.8% compared to FY2012.
The health and beauty aids category recorded revenues of $1,320.4 million in FY2013, a decrease
of 2.8% compared to FY2012.
Revenues by geography
The US, Rite Aid's only geographical market, accounted for 100% of the total revenues in FY2013.
Revenues from the US reached $25,392.3 million in FY2013, a decrease of 2.8% compared to
FY2012.

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SWOT Analysis

SWOT ANALYSIS
Rite Aid is a retail drugstore chain operator, engaged in selling prescription drugs and other
merchandise. The company's large customer base and wide product range will help it sustain its
strong market position in the long term. However, stiff competition from drug retailing chains and
mass market retailers could put downward pressure on the company's margins.
Strengths

Weaknesses

Strong market presence and a wide product


range
Rite Aid's growing private brand portfolio to
fuel sales
Rite Aid builds customer base through
customer loyalty programs
Focus on providing innovative healthcare
services

Concentrated supplier base


Reliance on third party payors

Opportunities

Threats

Store segmentation to drive focused growth


Rising popularity of retail clinics offers
growth

Intense competition
Rising labor wages in the US

Strengths

Strong market presence and a wide product range


Rite Aid is the third largest retail drugstore chain in the US based on revenues and number of stores.
As of March 2, 2013, the company operated 4,623 drug stores in 31 states across the US and in
the District of Columbia. During FY2013, Rite Aid's stores filled approximately 297 million prescriptions
and served an average of two million customers per day. This was primarily due to the wide range
of products offered by the company. Rite Aid sells prescription drugs and a wide assortment of other
merchandise called front-end products. The company's large assortment of front-end offering
includes OTC medications, health and beauty aids, personal care items, cosmetics, household items,
beverages, convenience foods, greeting cards, seasonal merchandise, other convenience products
and photo processing services. About 25.5% of the US population visits Rite Aid stores at least once
a year. Rite Aid's large customer base and wide product range will help it to sustain its strong market
position in the long term.
Rite Aid's growing private brand portfolio to fuel sales

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SWOT Analysis

Rite Aid has a strong portfolio of private brand products. The company's private brands contributed
approximately 18.3% of the front end sales in the categories where private brand products were
offered in FY2013. Rite Aid organized its private brands into three separate tiers (premium,
national-brand equivalent and value) as part of its new private brand architecture in 2011. Rite Aid
converted about 3,000 stock-keeping units (SKUs) to the new architecture and increased its private
brand penetration compared to FY2012. Many of the new SKUs are in the company's value-priced
brand, Simplify.
The weak economic environment has driven consumers to become more value conscious, with more
of them opting for private label products. According to industry sources, among all major US retail
channels, private label sales increased by approximately 3% in 2012. Since 2009, annual growth of
store brands sales has averaged approximately 5%, compared to national brands sales annual
growth of approximately 2%. In line with the growing demand for private label products, the company
has been strengthening its private brand product line-up over the years. In 2011, Rite Aid launched
a new packaging design and refreshed few items in the Rite Aid Pharmacy health products, including
Renewal personal care and beauty line, Pantry foods and household goods, and Simplify, a
value-priced brand. In the same year, Rite Aid's private brand Thrifty Ice Cream introduced a new
lineup, including new flavors and varieties such as nonfat frozen yogurt and take-home pint containers.
Furthermore, in 2012, the company added new Thrifty Ice Cream varieties, including Greek-style
nonfat frozen yogurts in Blueberry Cheesecake and Chocolate Lovers flavors. Rite Aid's strong
portfolio of private brands, growing on the customer preference for private label products, strengthens
its revenue and profitability.
Rite Aid builds customer base through customer loyalty programs
Rite Aid has been consistent with its efforts to build customer loyalty. The company rolled out the
wellness+ loyalty program in FY2011. Wellness+ is a card based loyalty program which allows
cardholders to accumulate points for certain front end and prescription purchases, which can then
be converted into discounts and additional savings. At the end of FY2013, the wellness+ program
had over 25 million active members, accounting for approximately 79% of front end sales and 68%
of prescriptions filled. The company added new features to the program in FY2012; it created a
Bronze member tier and introduced the Load2Card feature. When a member attains 250 points,
they reach the Bronze tier. Bronze tier members receive 10% off on the purchase of all Rite Aid
private brand merchandise and a one-time 10% shopping pass. Load2Card, a new coupon
management program, enables customers to save, manage and redeem Rite Aid and manufacturer
coupons available throughout the internet via their wellness+ card. This program also includes Gold
and Silver tier levels. The company continued to launch other programs such as wellness+ for
Diabetes (launched in November 2012) and wellness65+ (launched in July 2013). The wellness+
for Diabetes program gives members access to diabetes specialists online or over the phone, and
to monthly e-newsletters with the latest information on diabetes research, events, and health fairs.
The wellness65+ is the first chain drug store loyalty program (for people aged 65 and over) which
offers 20% off on non-prescription purchases in the first Wednesday of every month. Rite Aid
customers who enroll in the program will be automatically eligible for an expanded wellness65+
pharmacist consultation. In addition, members of wellness65+ will also receive the same rewards
and benefits as that of wellness+.

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SWOT Analysis

Rite Aid has taken several initiatives to improve customer loyalty. The company offers automatic
mobile text alerts when patients' prescriptions are ready. The company sends refill and pick-up
reminders by text, email or automated phone calls. In addition to this, the company offers discounts
through programs such as the free Rx Savings Card and the Living More senior loyalty program.
The free Rx Savings Card provides cost savings on prescription drugs and OTC medicines to patients
with limited or no insurance. The Living More senior loyalty program offers senior citizens prescription
discounts and informational materials.
The company's wellness+ program has contributed to sales growth in FY2013. The company plans
to make additional incremental investments in wellness+ in FY2014. Rite Aid's strong focus on
customer loyalty protects and builds its customer base, enhancing its revenue.
Focus on providing innovative healthcare services
The company has been focusing on delivering services to its customers in innovative and more
sophisticated means. Rite Aid was the first to provide a virtual clinic in a retail pharmacy setting. In
2011, Rite Aid and OptumHealth (a part of Optum, a health services company) introduced NowClinic
Online Care services in select Rite Aid pharmacies in the greater Detroit area. NowClinic offers Rite
Aid customers real-time access to medical care, information and resources from doctors and
OptumHealth nurses. The company expanded NowClinic Online Care services to 58 additional Rite
Aid pharmacies in Baltimore, Boston, Philadelphia and Pittsburgh in March 2013.
Furthermore, in FY2013, the company rolled out the Rite Care Prescription Advisor program in its
stores. Through this program the companys pharmacists can initiate one-on-one consultations with
patients in order to explain the health benefits of taking medications as prescribed. During the same
time, Rite Aid also provided Medication Therapy Management services to patients with complex
medication therapies and specialized services to patients with diabetes. In April 2013, the company
launched the new Riteaid.com, which was redesigned to provide visitors with easier access to Rite
Aid's online pharmacy services, health and wellness information, Rite Aid's online store, and savings
among others. Therefore, focus on providing innovative services enables the company to offer
greater convenience to its customers and offer superior customer service.

Weaknesses

Concentrated supplier base


Rite Aid purchases its brand prescription drugs from a single supplier, McKesson Corp (McKesson),
under a contract which runs through March 31, 2016. As per the contract, Rite Aid is required to
purchase all of its branded pharmaceutical products from McKesson. In FY2013, Rite Aid purchased
brand pharmaceuticals and some generic pharmaceuticals, which amounted to approximately 88.7%
of the dollar volume of its prescription drugs, from this supplier. A disruption in Rite Aid's relationship
with McKesson could erode the supply of branded and generic pharmaceuticals. Additionally, the

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SWOT Analysis

dependence created by this supplier concentration could weaken Rite Aid's negotiating power. This,
in turn, could impact its ability to source its offering at favorable terms.
Reliance on third party payors
The company's pharmacy sales to customers covered by third party payors (such as insurance
companies, prescription benefit management companies, government agencies, private employers
or other managed care providers) that agree to pay for all or a portion of a customer's eligible
prescription purchases based on negotiated and contracted reimbursement rates increased
significantly in the recent past. In FY2013, 96.6% of the company's pharmacy sales were to customers
covered by third party payors. The top five third party payors accounted for approximately 71.7% of
pharmacy sales, the largest of which represented 35.3% of pharmacy sales. Third party payors could
reduce the reimbursement levels for prescription drugs. Any significant loss of third-party payor
business or any significant reduction in reimbursement levels could have an adverse impact on the
company's business and results.

Opportunities

Store segmentation to drive focused growth


Rite Aid is continuing to build its segmentation strategy and has been trying out customized store
formats for its different markets. During FY2011, the company entered into a 10-store pilot program
with Save-a-Lot, a subsidiary of SUPERVALU. The Save-A-Lot/Rite Aid pilot stores included a full
grocery shop with meat, produce and dairy, besides drugstore offerings and a full service pharmacy.
Rite Aid also experimented with a value store format. These stores have lower front end prices, a
more focused front end SKU selection and a full service pharmacy. The new value stores were
tested in 37 stores with varied degrees of new merchandise. With low price items, these value stores
provide stronger front-end sales growth for many Rite Aid branded stores.
In FY2012, Rite Aid introduced a new Wellness format store with better space allocation and lighting.
These stores offer an expanded selection of organic foods, all natural personal care products and
homeopathic medicines, along with expanded clinical pharmacy services. These stores are staffed
with unique Wellness Ambassadors, who serve as a bridge from the front-end of the companys
stores to the pharmacy and provide an added level of customer service. The company completed
274 wellness remodels in FY2012 and 500 in FY2013. Rite Aid plans to remodel an additional 400
stores to the Wellness format in FY2014. The customer response to this store format has been
positive and front-end sales trends in these stores have been above the chain average. In FY2013,
the company introduced the latest iteration of its Wellness store format known as Genuine Well-being.
These stores feature new interior design, additional wellness items and unique merchandising
displays to help customers make more informed purchase decisions.
Rite Aid's segmentation, customization and improvement of its stores and their offerings will enable
the company to achieve sales growth with a more focused approach.

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SWOT Analysis

Rising popularity of retail clinics offers growth


Retail clinics, which are typically walk-in clinics located in pharmacies or grocery stores, have been
gaining popularity in the US. Low cost entry points and extended hours of operations compared to
hospitals are the key factors driving the growth of retail clinics. Factors such as demand for convenient
healthcare at affordable prices are expected to further drive the growth in this segment. According
to industry estimates, the number of retail clinics in the US is expected to grow from about 1,400 in
2012 to 2,700 by 2016.
Another area where retail pharmacy channel plays an important role is immunization against various
types of flu. According to a survey conducted by the Centers for Disease Control and Prevention
during 201213 flu season, nearly 57% of children and 42% of adults received influenza vaccination.
Though the most common place of vaccination among both adults and children was a doctor's office,
pharmacies, supermarkets and other stores were also key places which saw customers coming for
their vaccine shots. Rite Aid offers immunization in all its stores through 11,000 certified immunizing
pharmacists against 14 diseases, including seasonal flu shots. During FY2013, the company's
pharmacists administered 2.4 million flu shots, an increase of about 60% compared to previous year.
The increased demand for retail clinic services will increase Rite Aid's revenue from this segment,
besides offering opportunities for cross-selling to these customers.

Threats

Intense competition
The retail drugstore industry is highly competitive. Rite Aid faces competition from retail drugstore
chains, independently owned drugstores, supermarkets, discount stores, mass merchandisers, dollar
stores and mail order pharmacies, among others. The company is facing stiff competition from its
rival retail pharmacies such as Walgreen and CVS Caremark. Walgreen operated 8,582 locations
across 50 states in the US, the District of Columbia, Guam and Puerto Rico as of August 31, 2013,
while CVS Caremark operated 7,458 retail drugstores (of which 7,402 operated a pharmacy) in 42
states, the District of Columbia and Puerto Rico as of December 31, 2012. Furthermore, mass market
retailers like Wal-Mart are also expanding their drug retailing operations. Wal-Mart is the world's
largest retailer with more than 11,000 stores; these stores also have a health and wellness department,
offering pharmacy services, optical services and over-the-counter drugs. Comparatively, Rite Aid
operated 4,623 drug stores in 31 states and the District of Columbia in FY2013. In addition, in
prescription benefit management (PBM) industry, the company competes with Medco Health Solutions,
Express Scripts and other local or regional PBM companies.
The strong market presence of Rite Aid's competitors along with their significant resources could
have a major impact on the pricing and margins of their offerings. This may put compounded pressure
on Rite Aid's drug margins and lower its profits. Stiff competition from drug retailing chains and mass
market retailers could strain the company's margins and affect its profitability.

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SWOT Analysis

Rising labor wages in the US


Tight labor markets, increased overtime, government mandated increases in minimum wages and
a higher proportion of full-time employees are resulting in an increase in labor costs for employers
in the US. The federal minimum wage rate in the US, which remained at $5.15 per hour since 1998,
increased to $5.85 per hour in 2008. It further increased to $6.55 per hour in 2009 and to $7.25 per
hour in 2010. Many states and municipalities in the country have minimum wage rate even higher
than the federal minimum wage rate due to the higher cost of living. In California, where Rite Aid
has 583 stores, the minimum wage rate has been $8 per hour since 2008; in Ohio, where it has 224
stores, the minimum wage rate increased from $7.85 in 2013 to $7.95 in 2014; and in Washington,
where it has 138 stores, the minimum wage rate increased from $9.19 in 2013 to $9.32 in 2014. The
company employed 89,000 people as of March 2, 2013. Increased labor costs could increase overall
costs and affect the company's margins.

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Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Rite Aid Corporation

Safeway Inc.
Target Corporation
Walgreen Co.
Wal-Mart Stores, Inc.
Omnicare, Inc.
Costco Wholesale Corporation
CVS Caremark Corporation
Duane Reade Holdings Inc.
Vitamin Shoppe, Inc.

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Company View

COMPANY VIEW
A statement made by John Standley, Chairman of the Board and Chief Executive Officer at Rite Aid,
is given below. The statement has been taken from the company's FY2013 letter to the investors.
Dear Fellow Investors:
Thanks to the hard work and dedication of our entire Rite Aid team, we generated outstanding results
in fiscal 2013 and delivered one of the best years in our companys 50-year history. In addition to
our return to profitability, we set an all-time company record for full-year Adjusted EBITDA and
completed a comprehensive debt refinancing that gives us the financial flexibility we need to execute
our business plan. We also grew same-store prescription count, increased front-end same-store
sales and exceeded our goal for flu immunizations in fiscal 2013.
These tremendous accomplishments have been many years in the making. During this time, our
90,000 associates have embraced our strategy and worked hard to exceed expectations in our
stores and distribution centers each and every day. Together, we are successfully transforming Rite
Aid into a true neighborhood destination for health and wellness. As a result, we are a stronger
company that is better equipped to meet the individual wellness needs of our customers and patients.
Our transformation into a wellness destination couldnt have come at a more critical time. As the
U.S. population ages and the Affordable Care Act takes hold, its apparent that our customers and
patients will be relying on us more than ever to help them manage their wellness in an increasingly
complex health care environment. Thats why we continue to expand our offering to include services
such as immunizations, one-on-one patient counseling and tools that encourage and assist our
patients in taking their medications as prescribed.
Though some would view this changing health care landscape as a challenge, we view it as a
significant opportunity to grow our business and develop new and exciting ways to serve our
customers. In order to deliver long-term value for our shareholders, we are committed to implementing
a strategy that aligns with the evolution of U.S. health care and the practice of pharmacy while
meeting the unique and changing needs of our customers and patients.
As we enter fiscal 2014, we look forward to continuing our wellness transformation by providing our
patients with personalized care while leveraging our enhanced wellness offerings to attract additional
customers. Our goal for the year is to continue our positive momentum by building upon the same
key initiatives that have fueled our improved performance and embracing new ways of doing business
in a changing health care environment.
Were Making wellness+ Even Stronger
Since launching in fiscal 2011, our wellness+ customer loyalty program has played a key role in
generating improved business results and strengthening Rite Aid as a wellness destination. We

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Company View

believe this highly successful program continues to be the richest and most rewarding loyalty program
in our industry.
Despite increased competition in the drugstore loyalty space, our active wellness+ membership
continues to grow and members continue to frequently use their loyalty card. Heading forward,
wellness+ will continue to be the cornerstone of our wellness strategy, and we are focused on finding
new ways to enhance the program to provide a more personalized and engaging drugstore experience.
Were Providing Care Beyond Prescriptions There is no doubt that we had an excellent year in
pharmacy. Same-store prescription count grew 3.4 percent, largely due to our ability to attract and
retain a very high number of patients who came to Rite Aid during the Express Scripts-Walgreens
dispute. In addition, we benefitted from a wave of new generic medications, which were a key driver
of our improved pharmacy gross margin.
As we look forward, we are focused on delivering care beyond prescriptions to provide our patients
with a broader range of wellness services that drive better patient health outcomes and help to lower
health care costs.
A great example is our immunizations program. In fiscal 2013, our pharmacists administered nearly
2.4 million flu immunizations, a 60 percent increase over the previous year. Meanwhile, we continue
to offer one-on-one pharmacist-patient counseling through our Rite Care Prescription Advisor program,
which gives our pharmacists a platform to explain to patients the importance of taking medications
as their doctor prescribed. Were also expanding our capabilities to deliver more Medication Therapy
Management services.
As we continue to expand the role of our pharmacistswho are among the most trusted professionals
in health carewe believe we are uniquely positioned to provide a wider, more sophisticated range
of services that delivers convenient, affordable health solutions as part of a more personalized
drugstore experience.
We see further opportunities to develop programs that meet the specific needs of our poly chronic
patients, many of whom are seniors aged 65 and older. Poly chronic patients are those who suffer
from multiple chronic conditions such as heart disease, arthritis and diabetes, and they often have
a difficult time managing their complex prescription therapies and overall health. At Rite Aid, we
believe that we can make a more meaningful difference in the lives of these customers and patients.
We view this as a key opportunity for fiscal 2014 and beyond.
Were Transforming Rite Aid Into A Wellness Destination
Our Wellness stores are perhaps the most visible component of our broader health and wellness
strategy. These remodeled stores feature expanded pharmacy services, additional wellness and
fitness items and our Wellness Ambassadors, who serve as a bridge from the front end of our stores
to the pharmacy by informing customers about the pharmacy services we offer and facilitating the
pharmacistpatient relationship.

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Company View

In a little over two years, we have converted 800 Rite Aid stores to the Wellness format and trained
nearly 1,300 Wellness Ambassadors to provide a higher level of customer service in these stores.
We have also created the new Genuine Well-being format, the latest iteration of our wellness concept
that features a unique interior design and new innovative merchandising concepts. As we continue
to reinvest in our store base, we plan to convert an additional 400 stores to the Genuine Well-being
format in fiscal 2014.
Were Focused On Meeting Our Customers Needs
Our associates are doing a tremendous job of providing a unique, engaging and personalized
shopping experience in our stores. According to the latest retail results from the American Customer
Satisfaction Index, an independent and well-respected measure of customer satisfaction, we have
earned the top position among major drugstore chains.
Our associates have also demonstrated their commitment to making it personal in our communities.
Last year, we celebrated Rite Aids 50th anniversary by holding 50 special Acts of Wellness
community events throughout our chain. The positive energy surrounding these events was
tremendous and showed existing and potential customers that we are caring neighbors.
Were Committed To Delivering Long-term Value
Fiscal 2013 was a banner year for our company, both in terms of the outstanding results we generated
and the tremendous progress we made in strengthening Rite Aid as a wellness destination. We are
proud of our recent success, but we also understand that our quest to create the best drugstore
experience in our business is just beginning.
As our company begins a new fiscal year, we thank our associates for their commitment to
understanding our strategy and bringing it to life every day in our stores. We thank our supplier
partners for collaborating with us to deliver wellness, value, innovation and a one-of-a-kind shopping
experience. We are grateful to our Board of Directors for their guidance, especially Michel Coutu,
who recently left our board, and Mary Sammons and James Donald, who are leaving the board in
June. We thank them for their years of valuable service to Rite Aid. At the same time, we look forward
to the service of Bruce Bodaken, former Blue Shield of California chairman, president and CEO,
who joined our board earlier this month.
And we thank you, our investors, for your continued support as we position Rite Aid to be the
customers number one choice for health and wellness.

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Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES


Head Office
Rite Aid Corporation
30 Hunter Lane
Camp Hill
Pennsylvania 17011
USA
P:1 717 761 2633
http://www.riteaid.com

Other Locations and Subsidiaries


Rite Aid
1321 Riverside Parkway
Belcamp
Maryland 21017
USA

Rite Aid
4957 Carlisle Pike
Mechanicsburg
Pennsylvania 17055
USA

Rite Aid
3601 Bergenline Avenue
Union City
New Jersey 07087
USA

Rite Aid
200 Kanawha Avenue
Rainelle
West Virginia 25962
USA

Rite Aid
301 South Salina Street
Syracuse
New York 13202
USA

Rite Aid
3433 Government Street
Baton Rouge
Louisiana 70806
USA

Rite Aid
510 Woodburn Road
Raleigh
North Carolina 27605
USA

Rite Aid
891 Ponce De Leon Avenue North East
Atlanta
Georgia 30306
USA

Rite Aid
72 South Main Street
Salt Lake City
Utah 84101
USA

Rite Aid
25 South Broad Street
Elizabeth
New Jersey 07202
USA

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