Wendy future of retail top

Rite Aid posts smaller loss in 1Q

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CAMP HILL, Pa. — Rite Aid Corp. saw sales dip in its fiscal 2011 first quarter but recorded a smaller year-over-year loss and topped Wall Street’s earnings forecast.

The drug store chain on Wednesday said its net loss for the 13-week first quarter ended May 29 was $73.7 million, or 9 cents per diluted share, compared with $98.4 million, or 11 per diluted share, a year earlier. A decrease in selling, general and administrative (SG&A) expenses and lower charges related to store closings contributed to decreased net loss, according to Rite Aid.

Rite Aid’s loss in the quarter came in smaller than the projected range of financial analysts. The average analyst estimate was for a loss of 14 cents per share, with the forecast ranging from a low of 16 cents to a high of 10 cents, Thomson Financial reported.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $249.8 million, or 3.9% of revenue, for the 2011 first quarter versus $249.2 million, or 3.8% of revenue, in the prior-year period.

On the sales side, Rite Aid saw revenue dip 2.1% to $6.4 billion in the 2011 first quarter from $6.5 billion a year ago. The retailer attributed the decrease to store closings and a 1% decline in same-store sales during the quarter.

Same-store results reflected a 1.3% decrease in the front end and a 0.9% decline in the pharmacy. Pharmacy sales included an approximate 138-basis-point negative impact from new generic drug introductions, according to the company, which added that the number of prescriptions filled in same stores decreased 1.7% over the year-ago period.

"We accomplished a lot in the first quarter. Our team continued to improve operational efficiency to help offset the challenging economic and competitive environment impacting sales and margin," Rite Aid chairman and chief executive officer Mary Sammons said in a statement.

"We increased adjusted EBITDA as a percent of sales while at the same time improved customer satisfaction ratings on both the front end and in the pharmacy," Sammons stated. "Our liquidity position remained strong, which is critically important if the economy continues to be slow to recover."

President and chief operating officer John Standley, who later on Wednesday is slated to take the helm as the new CEO, noted that Rite Aid "made excellent progress" on its strategic initiatives during the first quarter.

"We nationally launched our new wellness+ customer loyalty program, began immunization training that will more than triple the number of Rite Aid pharmacists able to provide vaccinations, and introduced the first products in our revamped private-brand program into the stores," explained Standley. "We expect these sales initiatives, along with the continued rollout of our segmentation strategy, to have a significant positive impact on our business long term."

In the first quarter, Rite Aid opened two new stores, relocated eight, remodeled one and closed 15. As of May 29, the retailer operated 4,767 stores.

Rite Aid also confirmed fiscal 2011 guidance, with the net loss is expected to be between $355 million and $570 million, or 41 cents to 65 cents per diluted share. Meanwhile, the company projected full-year sales at $25.2 billion to $25.6 billion and same-store sales to range from a decrease of 1% to an increase of 1% over fiscal 2010.

For Rite Aid’s fiscal 2011, Thomson Financial reported an average analyst estimate of a loss of 52 cents per share, with the forecast ranging from a low of 60 cents to a high of 35 cents.


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