Tags: US | Earns | Rite | Aid

Rite Aid Takes Bigger Loss on Lower Sales

Thursday, 23 Sep 2010 12:25 PM

Drugstore operator Rite Aid Corp. on Thursday reported a bigger loss for its fiscal second quarter as its revenue slipped 2.5 percent and it refinanced some of its debts.

The Camp Hill, Pa., company said it expects a bigger loss this year because of weaker sales and charges related to debt refinancing, which reduces its interest expenses. It cut its revenue estimate by about $200 million.

Rite Aid is the third largest drugstore chain in the U.S. behind Walgreen and CVS.

Its shares dropped 16 cents, or 14.2 percent, to 94 cents in morning trading, approaching its 52-week low of 86 cents a share.

Rite Aid said it had a net loss of $199.3 million, or 23 cents per share, after paying preferred dividends in the quarter ended Aug. 28. Its net loss was $120.4 million, or 14 cents per share, a year ago.

Rite Aid said refinancing expenses added 5 cents per share to its overall loss. Without that, its loss would have been 18 cents a share. Analysts expected a loss of 16 cents per share, according to Thomson Reuters. Their estimates typically exclude one-time items.

Also contributing to Rite Aid's loss were costs related to its Wellness Plus customer rewards program. Rite Aid said 22 million shoppers are now participating in the program, which was launched in April. Membership has increased by about 10 million in the last three months. The company also said demand for flu shots has increased compared to last year.

The company said revenue fell to $6.16 billion from $6.32 billion a year ago. Analysts expected $6.19 billion.

Revenue at stores open at least a year, which is considered a key measurement of retailer health, fell 1.5 percent. It said some sales trends improved in the second quarter and have gotten better in September. Rite Aid said sales at those stores should decrease between 0.5 percent and 0.8 percent this month.

The company is also trying to boost its results by converting some of its stores into "value stores," which carry fewer products and have lower prices. It now has 37 of those stores. It is also preparing to add grocery sections to 10 stores in South Carolina through a partnership with Supervalu Inc. If those plans are successful, grocery sections could be added to more stores.

Rite Aid closed 20 stores during the quarter, remodeled five and relocated one. That left it with 4,747 locations in 31 states and Washington, D.C.

Walgreen Co. runs approximately 7,560 drugstores and CVS Caremark Corp. has about 7,100.

Rite Aid said it now expects to lose between 46 cents per share and 67 cents per share in the fiscal year ending Feb. 26. The company previously forecast a loss of 41 cents to 65 cents per share. It now estimates $25 billion to $25.4 billion in sales, down from between $25.2 billion to $25.6 billion.

Analysts expected a loss of 50 cents per share and revenue of $25.3 billion.

The company now thinks sales at stores open at least a year will not get better in fiscal 2011. It said those sales could decrease as much as 1.5 percent from the previous year and will be no better than even with its fiscal 2010 results. Previously right Aid said those sales could grow as much as 1 percent or fall as much as 1 percent.

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Drugstore operator Rite Aid Corp. on Thursday reported a bigger loss for its fiscal second quarter as its revenue slipped 2.5 percent and it refinanced some of its debts.The Camp Hill, Pa., company said it expects a bigger loss this year because of weaker sales and charges...
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2010-25-23
 

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