Rite Aid Corp. turned in virtually flat revenue for its fiscal 2011 fourth quarter and reduced its net loss compared with a year earlier.


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Rite Aid posts flat sales, shrinks loss in 4Q

April 7th, 2011

CAMP HILL, Pa. – Rite Aid Corp. turned in virtually flat revenue for its fiscal 2011 fourth quarter and reduced its net loss compared with a year earlier.

The drug store chain on Thursday also reported a dip in total sales for fiscal 2011 and a larger net loss for the full year. Both the quarterly and full-year earnings results were in line with financial analysts' estimates.

For the 13-week fourth quarter ended Feb. 26, revenue totaled $6.456 billion, nearly flat compared with last year's total of $6.464 billion.

Same-store sales for the quarter edged up 0.9%, reflecting of a 1.0% increase in the front end and a 0.8 percent increase in the pharmacy. Rite Aid said pharmacy sales included a 226-basis-point negative impact from generic drug introductions. The number of prescriptions filled in same stores increased 0.8%.

On the earnings side, the 2011 fourth-quarter net loss came in at $205.7 million, or 24 cents per diluted share, versus a net loss of $208.4 million, or 24 cents per diluted share, a year earlier. The average analyst estimate was for a net loss per share of 24 cents, with the forecast ranging from a low of a 26 cents-per-share loss to a high of a 21 cents-per-share loss, according to Thomson Financial

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $215.4 million, or 3.3% of revenue, in the quarterly, up from $205.1 million, or 3.2% of revenue, in the prior-year period.

Rite Aid noted that fourth-quarter results were positively impacted by improving same-store sales trends, a lower LIFO charge and reduced selling, general and administrative (SG&A) costs, offset by higher lease termination and impairment charges.

"We made solid progress this quarter as our initiatives to grow sales and improve customer satisfaction gained momentum, " John Standley, Rite Aid's president and chief executive officer, said in a statement. "We increased same-store sales both in the front end and pharmacy and grew prescriptions in comparable stores. At the same time, our team continued to do a good job of controlling costs.

"We are especially pleased with the growth of our wellness+ loyalty program, which now has over 36 million members," Standley added. "Customers and patients tell us they appreciate the great value and benefits it provides."

For the 52-week fiscal year ended Feb. 26, 2011, Rite Aid had sales of $25.21 billion, down 1.8% from $25.67 billion a year earlier. The retailer said the decrease stems mainly from having 66 net fewer stores and a decline in same-store sales during the first three quarters of the year.

Comparable-store sales for the year dipped 0.7%, including declines of 0.3 percent in the front end and 0.9% in the pharmacy. Rite Aid said pharmacy comp-store sales reflected an approximate 200-basis-point negative impact from new generics introductions. The number of prescriptions filled in same stores decreased 1.2%.

The net loss for fiscal 2011 was $555.4 million, or 64 cents per diluted share, compared with a net loss of $506.7 million, 59 cents per diluted share, a year ago. Thomson Financial reported that the consensus analyst estimate for the fiscal year was a net loss of 63 cents per share, with projections running from a low of a 66-cents-per-share loss to a high of a 57-cents-per-share loss. Contributing to the bigger net loss were lower sales and a loss on debt retirement partially offset by a decrease in SG&A expense, according to Rite Aid.

Adjusted EBITDA for fiscal 2011 was $859 million, or 3.4% of revenue, down from $925 million, or 3.6% of revenue, in the previous year.

Rite Aid said that during fiscal 2011, it opened three new stores, relocated 28 stores, remodeled 19 stores and closed 69 stores. Stores in operation at the end of the year totaled 4,714.

Looking ahead to fiscal 2012, which has 53 weeks, Rite Aid said it expects sales of $25.7 billion to $26.1 billion, with same-stores sales rising 0.5% to 2%. The drug chain forecasts a net loss of $370 million to $560 million, or a loss per diluted share of 42 cents to 64 cents, in line with analysts' estimates.

Rite Aid noted that its 2012 outlook reflects current same-store sales trends, a challenging reimbursement rate environment and the impact of continued investments in its customer loyalty program and other initiatives to spur sales. The company reported that capital expenditures are expected to be around $300 million, which includes a ramp-up in the number of store remodels and prescription file buys.

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