Rite Aid Corp. saw same-store sales rise in May, but the company lowered its fiscal 2015 forecast, citing factors affecting pharmacy margins.


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Rite Aid reports sales gain for May, revises outlook

June 5th, 2014

CAMP HILL, Pa. – Rite Aid Corp. saw same-store sales rise in May, but the company lowered its fiscal 2015 forecast, citing factors affecting pharmacy margins.

The drug chain said Thursday that for the five weeks ended May 31, comparable-store sales advanced 3.5% year over year.

The increase continued Rite Aid's comp-store sales growth trend this year, including gains of 5% in April, 0.7% in March, 1.5% in February and 1.8% in January.

In the front end, same-store sales edged up 0.5% in May. Comparable pharmacy sales rose 5%, reflecting a negative impact of 156 basis points from introductions of new generic drugs, which carry lower prices but higher margins. Prescription count at comparable stores was up 3.2 for the month.

Overall drug store sales for May were $2.484 billion, up 2.5% from $2.423 billion a year earlier. Prescription sales accounted for 68% of drug store sales.

For the 13-week fiscal 2015 first quarter ended May 31, same-store sales rose 3.1% over the year-ago period, including flat results in the front end and a 4.6% gain in the pharmacy. Prescriptions filled at comparable stores increased 2.3%.

Total drug store sales in the first quarter climbed 2.6% to $6.425 billion from $6.264 billion a year earlier. Prescription sales represented 68.4% of overall drug store sales.

Rite Aid plans to release its full first-quarter results on June 19. However, the company reported that it expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to come in at $275 million to $285 million and net income to total $35 million to $45 million, with earnings per diluted share of 4 cents. As of Thursday morning, the average analyst earnings estimate was 8 cents per share, with projections ranging from a low of 6 cents to a high of 9 cents, according to Thomson Financial.

"Based on pharmacy margin trends, particularly in May, the company expects its results for adjusted EBITDA to trail the results for the previous year's first quarter due primarily to higher-than-expected drug costs resulting from a delay in realizing the level of expected generic purchase price reductions and a greater-than-expected reduction in reimbursement rates," Rite Aid stated Thursday, adding that its first-quarter results haven't yet been finalized.

Rite Aid also trimmed its fiscal 2015 outlook due to the revised first-quarter guidance and generic purchase price reductions expected for the rest of the year.

For fiscal 2015, the company now projects adjusted EBITDA of between $1.275 billion and $1.350 billion and net income of between $298 million and $408 million, or 30 cents to 40 cents per diluted share.

In its previous guidance for fiscal 2015, Rite Aid forecast adjusted EBITDA of $1.325 billion to $1.4 billion and net earnings of $313 million to $423 million, or 31 cents to 42 cents per diluted share.

On average, as of Thursday morning, analysts forecast Rite Aid's full-year earnings at 39 cents per share, with estimates running from a low of 33 cents to a high of 46 cents, according to Thomson Financial.

Rite Aid said Thursday that its fiscal 2015 guidance for sales, same-store sales increases and capital expenditures remain the same.

As of May 31, Rite Aid operated 4,581 drug stores, compared with 4,614 stores a year ago.

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