Rite Aid Corp. saw its revenue grow and its net loss shrink for the fiscal 2012 fourth quarter and full year but fell short of analysts' earnings forecast.


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Rite Aid's results improve in 4Q, full year

April 12th, 2012

CAMP HILL, Pa. – Rite Aid Corp. saw its revenue grow and its net loss shrink for the fiscal 2012 fourth quarter and full year but fell short of analysts' earnings forecast.

The drug chain said Thursday that for the 14-week fourth quarter ended March 3, revenue climbed 10.7% to $7.1 billion from $6.5 billion in the prior-year 13-week quarter.

Besides the extra week, a rise in same-store sales also fueled the revenue gain in the quarter, partially offset by store closings, according to Rite Aid. Comparable-store sales were up 3% year over year, reflecting gains of 1.6% in the front end and 3.8% in the pharmacy.

The retailer said pharmacy sales included a 216-basis-point negative impact from generic drug introductions. Meanwhile, the number of prescriptions filled in comparable stores increased 2.4%, which Rite Aid said reflected the benefit of a decrease in the number of pharmacies in the Express Scripts network. Prescription sales accounted for 67.4% of total drug store sales in the quarter.

On the earnings side for the fourth quarter, Rite Aid turned in a net loss of $161.3 million, or 18 cents per diluted share, compared with a net loss of $205.7 million, or 24 cents per diluted share, a year earlier.

That missed the average analyst estimate of a loss of 14 cents per share, with the forecast ranging from a low of a 19-cents-per-share loss to a high of a 7-cents-per-share loss, according to Thomson Financial.

Rite Aid attributed the smaller net loss in the quarter to an increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) as well as decreases in depreciation and amortization and lease termination and impairment charges, and an income tax benefit versus an income tax expense last year. Partially offsetting those improvements, the company said, were a significantly higher LIFO charge, a loss on debt modification charge, and a lower gain on sale of assets compared with a year ago.

Adjusted EBITDA in the fourth quarter came in at $274.3 million, or 3.8% of revenue, compared with $215.4 million, or 3.3% of revenue, a year earlier. Rite Aid said increased same-store sales, improvements in FIFO gross margin and the extra week contributed to the gain in adjusted EBITDA.

"We made strong progress in fiscal year 2012 and feel positive about our improved business results, highlighted by same-store sales and adjusted EBITDA increases for the fifth consecutive quarter," Rite Aid president and chief executive officer John Standley said in a statement.

"Thanks to the hard work and dedication of the entire Rite Aid team throughout the year, we achieved these outstanding results by more than doubling the number of flu shots we administered last year; completing 274 wellness remodels; significantly growing our Rite Aid brand program; and achieving continued success with our award-winning wellness+ customer loyalty program," Standley stated. "While there is still hard work ahead, I am pleased we are beginning our new fiscal year with positive momentum."

For the 53-week fiscal year, Rite Aid's revenue advanced 3.6% to $26.1 billion from $25.2 billion in the 52-week prior year, driven mainly by a gain in same-store sales and the additional week, according to the company.

Comp-store sales for the year rose 2%, including gains of 1.1% in the front end and 2.4% in the pharmacy. Rite Aid said pharmacy sales reflected a 169-basis-point negative impact from generic drug introductions. The number of prescriptions filled in same stores edged up 0.9%. Prescription sales represented 68.1% of total drug store sales for the year.

The fiscal 2012 net loss was $368.6 million, or 43 cents per diluted share, down from a net loss of $555.4 million, or 64 cents per diluted share, a year earlier.

Still, the full-year loss exceeded the average analyst estimate of a loss of 38 cents per share, with projections ranging from a low of a 43-cents-per-share loss to a high of a 31-cents-per-share loss, Thomson Financial reported.

Adjusted EBITDA for fiscal 2012 was $942.9 million, or 3.6% of revenue, up from $859 million, or 3.4% of revenue, last year.

As of March 3, Rite Aid operated 4,667 drug stores, including 280 locations with the wellness store format. The retailer said that during fiscal 2012 it relocated 15 stores, remodeled 278 stores and closed 47 stores.

Looking ahead to fiscal 2013, Rite Aid projects sales of $25.4 billion to $25.8 billion and same-stores sales growth ranging from flat to an increase of 1.5%.

The company forecasts a net loss of $103 million to $267 million, or 13 cents to 31 cents per diluted share, for fiscal 2013. Analysts forecast, on average, a loss of 25 cents per share, with projections running from a low of a 44-cents-per-share loss to a high of a 13-cents-per-share loss.

Rite Aid said it expects capital expenditures in fiscal 2013 to come in at about $300 million, including more wellness store remodels and prescription file buys.

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