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Why Rite Aid Shares Climbed as High as 36% Thursday

By Daniel Miller - Jun 27, 2019 at 5:31PM

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Despite the company's weaker-than-expected first quarter, its new partnership with Amazon has investors feeling optimistic.

What happened

Shares of Rite Aid ( RAD -0.47% ) jumped as high as 36% on Thursday, even though the drugstore chain posted a weaker-than-expected first quarter. The gain was thanks to a partnership with Amazon. The stock closed the day up more than 20%.

So what

Rite Aid's stock was actually sliding lower in pre-market trading as a result of its disappointing first quarter. But it abruptly turned around when the company announced a partnership with ( AMZN -0.00% ). Rite Aid will open Amazon pickup counters in over 100 of its stores before rolling out more than 1,500 locations by year end. The program, called Counter, will enable consumers to pick up their orders with same-day, one-day, and standard shipping service. For investors, it was a breath of fresh air after Rite Aid has consistently declined throughout most of 2019.

RAD Chart

RAD data by YCharts.

Now what

The development is mostly a no-brainer for the company because it's possible those consumers will stick around and shop while they're picking up their shipments. Jocelyn Konrad, Rite Aid's executive vice president for pharmacy and retail operations, said in a press release, "Being the first store partner for Counter in the U.S. is a differentiator for Rite Aid, and we believe our partnership with Amazon, that includes Locker, creates a stronger in-store experience for existing customers and new customers that come in to pick up their packages."

Consumer picking up an Amazon package

Image source: Amazon.

This development also makes perfect sense for Amazon, as the company is always on the prowl for innovative ways for customers to ship and/or receive their orders. Because having packages delivered directly to the home isn't always practical, the pickup option enables consumers to purchase online and receive the shipment at their convenience. It's also Amazon's latest flirtatious move with the pharmaceutical world. The company has acquired online pharmacy PillPack and has a healthcare joint venture with Berkshire Hathaway and JPMorgan Chase

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Rite Aid Corporation Stock Quote
Rite Aid Corporation
$12.59 (-0.47%) $0.06, Inc. Stock Quote, Inc.
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