Rite Aid Cautious on Save-A-Lot

CAMP HILL, Pa. — Rite Aid Corp. here is still evaluating whether to roll out additional combination drug and food stores in partnership with Supervalu's [4] Save-A-Lot banner, noting the initial test of such stores is performing better in revenues than in profits.

"It's obviously a significant change for our stores to go from no perishables to a lot of perishables, because perishables are a big part of the mix in these stores, and that’s where we have a learning curve," John Standley, chief executive officer of Rite Aid, said during a conference call reviewing the retailer's quarterly financial results Thursday. "I think we’re making some good progress with it, but I think we have to convince ourselves that that’s a business that we can successfully execute and take good care of before we get too far down the line with this thing. So we again remain very encouraged by the early results, but we’ve got some work to do."

Standley said RiteAid in the meantime would focus on store remodels including newly created formats specifically designed for value and wellness. The former feature smaller selections and less expensive merchandise while the latter include more upscale designs and offerings.

Rite Aid and Save-A-Lot opened the co-branded stores last fall at 10 locations in Greenville, S.C., and initially reported strong sales gains at the stores, doubling front-end volume in the first months after opening.