Rite Aid to launch OTC products site with drugstore.com
BELLEVUE, Wash. and CAMP HILL, Pa. Rite Aid has announced a restructured strategic relationship with drugstore.com that includes the launch of a new Rite Aid online store for OTC products and expands on the two companies' successful long-term relationship.
Under the terms of the agreement, a new Rite Aid online OTC store offering a wide selection of products, including Rite Aid brand items, will be powered by drugstore.com and marketed by Rite Aid to its large customer base. Rite Aid's new online store is expected to launch later this year. LPU rights (prescriptions ordered online for pick up at a Rite Aid store) will be transferred to Rite Aid and in return, drugstore.com will receive a total of approximately $10 million in ten monthly installments from Rite Aid. Going forward, drugstore.com will receive marketing services revenue for marketing Rite Aid's LPU offering on the drugstore.com site.
"Rite Aid has been a strong partner for over nine years and we are pleased that this new agreement will leverage drugstore.com's leading health, beauty and wellness e-commerce platform to benefit both companies," said drugstore.com chairman and ceo Dawn Lepore. "Rite Aid will develop marketing programs to drive traffic to the new site, and given the differing demographics, we expect these sales to be incremental to drugstore.com."
"We are excited to partner with drugstore.com, which has the leadership position and expertise in online commerce to provide a very compelling offer to Rite Aid's large and loyal customer base," said Rite Aid coo Rob Easley. "Having our own online OTC store and being able to market directly to those customers is an important next step in our digital strategy."
"While the transfer of local pick-up to Rite Aid will have an impact on total revenue, it will significantly strengthen our overall growth rate and gross margins and is consistent with our strategy to focus on our higher growth, higher margin businesses," stated Lepore. "Looking ahead to 2009, we expect to exit the year with improved gross margins and strong adjusted EBITDA margins. We believe we will deliver consistent cash flow generation every quarter and GAAP profitability for 2009," concluded Lepore.