Own brands at CVS Health represent both a 'strength and an opportunity'

WOONSOCKET, R.I. — CVS Health on Tuesday reported its own brands represent both a "strength and an opportunity." "Our store brands represented 22.8% of front store sales in the quarter," Larry Merlo, president and CEO, CVS Health, told analysts. "That's up about 85 basis points from a year ago. There are significant opportunities to expand the share of store brand products by building on core equities in health and beauty, while seeking growth in other areas where we can provide customers a good value proposition."

The company in the past month unveiled a new store design focused on growing the company's offerings across the beauty, health care and personal care segments. "The new store formats offer an expanded assortment of healthier food, health-focused products and additional beauty offerings paired with discovery zones in key categories," Merlo explained. "And while the new store format is focused on 70 stores this year, we will continue to evolve as we test and learn in order to meet the needs of our customers."

Those new, health-focused formats have as many as 100 linear feet of new merchandise in health, beauty and healthier food. And CVS is also vastly expanding its offerings throughout health with a broader selection of vitamins and supplements. Assortments tied to emerging areas like connected health, sleep/mood and immunity are merchandised in “discovery zones” that offer holistic solutions that are more easy to navigate with the help of educational displays.

In the beauty aisles, CVS has added products that have greater skin health benefits and more natural ingredients, including an exclusive Korean Beauty selection that will be available in more than 2,100 locations this year.

Complementing the health and beauty focus are “better-for-you” food options, including 27 new items under the Gold Emblem Abound product line. Products that fit nutritional and dietary preferences are highlighted with shelf tags such as heart healthy, good source of protein, gluten free, sugar free, organic and non-GMO.

For the first quarter ended March 31, CVS Health's front end same-store sales declined 4.9%. The absence of leap day versus the prior year had a 100 basis point negative impact on front end same-store sales, while the shift of the Easter holiday to the second quarter in 2017 from the first quarter in 2016 had a 75 basis point negative impact.

Front store sales were also negatively impacted by softer customer traffic and efforts to rationalize promotional strategies, partially offset by an increase in basket size, CVS Health reported.

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