Rite Aid (RAD) Sharpens Edge: Adds Apple Pay Option Online
Zacks Investment Research | Oct 20, 2017 08:01AM ET
Rite Aid Corporation (NYSE:RAD) revealed that it is now accepting Apple Inc.’s (NASDAQ:AAPL) Apple Pay as a mode of payment on its website. This marks another step in the drugstore chain’s omni-channel initiatives. Notably, the company began using Apple Pay in its stores in 2015, when it also announced plans to use Google (NASDAQ:GOOGL) Wallet.
Why Apple Pay Online?
Rite Aid resorted to accepting Apple Pay online, as customers are using their smartphones to make transactions. In fact, management stated that over half of its website visitors access www.riteaid.com from their mobiles, the most being iPhone users. Notably, Apple Pay’s operations is currently spread across 15 nations including Australia, China, France, Hong Kong, Italy, Singapore and the United States among others.
Thus, accepting this most popular digital wallet is likely to be beneficial to Rite Aid, which apparently is the first pharmacy retailer to use this payment option online. Per the announcement, customers can purchase from an array of about 12,000 Rite Aid products at its online store and check out by tapping the Apple Pay payment button. Per sources, the option will be available for customers using Mac, iPhone, or iPad with certain specifications.
Can the New Payment Method Aid Rite Aid’s Performance?
We believe that this digital payment option should aid Rite Aid’s performance, which hasn’t been very impressive of late. The company’s bottom line has underperformed the Zacks Consensus Estimate by an average of 20.8% in the trailing four quarters, including two quarters of negative earnings surprise. Though the bottom line matched the Zacks consensus mark in the second quarter of fiscal 2017, the company reported a loss of 1 cent as against the year-ago period earnings of 3 cents per share. Rite Aid’s bottom line has declined year over year for over a year now.
Additionally, the top line remained soft in the second quarter, with same store sales falling on account of lower pharmacy and front-end sales. Well, Rite Aid has been posting year-over-year decline in sales for two straight quarters now due to lower same store sales and unfavorable reimbursement rates. Apart from these factors, Rite Aid’s second-quarter debacle also could be attributable to the impact of the failed merger with Walgreens Boots Alliance Inc. (NASDAQ:WBA) .
Owing to these factors, this Zacks Rank #4 (Sell) company has plunged 77.8% year to date, much worse than the Zacks Investment Research
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