NEW YORK — Retail sales climbed in the third quarter at Duane Reade Holdings Inc., which also posted a smaller net loss due to improved operating results.

The metropolitan New York drug store chain said Tuesday that net retail store sales for the 13 weeks ended September 26 rose 3.7% year over year to $429.2 million. Total net sales, which include pharmacy resale activity, increased 4.2% to $448.9 million.

Meanwhile, same-store sales inched up 0.7% in the third quarter, encompassing a 2.7% decrease in the front end and a 5.3% gain in the pharmacy.

Duane Reade noted that the pharmacy same-store sales growth reflects a rise in the average number of prescriptions filled per store and the effects of branded drug inflation, which has increased the average sale per prescription. During the third quarter, the average same-store weekly prescriptions filled per store rose 1.6%. A higher proportion of generic prescriptions adversely impacted pharmacy same-store sales growth by 2.8%, the company added. 

Overall front-end sales edged up 1% in the quarter, mainly due new store openings, as the difficult economy and reduced consumer spending impacted front-end same-store sales growth, according to the retailer.

On the earnings side, adjusted FIFO EBITDA in the third quarter increased 5.6% to $22.4 million, compared to $21.2 million a year earlier. The operating loss in the quarter came in at $3 million, down from $7.9 million in the prior-year period. Duane Reade said the improvement was driven by a $1.2 million gain in adjusted FIFO EBITDA and a $5.5 million reduction in other expenses, partially offset by increased depreciation and amortization expense.

The third-quarter net loss fell to $10.7 million from $22.3 million a year earlier, which the company attributed to the smaller operating loss and a $12.5 million gain on debt extinguishment, partially offset by a $6 million increase in interest expense. The increase in interest expense stemmed mainly from an interest charge of $5 million resulting from the completion of debt refinancing transactions, Duane Reade reported.

"We are pleased with the momentum of our business despite the impact of the challenging economy and reduced consumer spending," chairman and chief executive officer John Lederer said in a statement. "During the quarter, we continued to make solid progress with our business transformation plans and achieved several of our key goals, including the relaunch of our private-label household and value brands and the introduction of DR Delish, our new exclusive brand for food and beverages.

"Importantly, our customers remain enthusiastic about the positive changes that we are implementing across the business, and our entire team remains fully committed to making our brand mantra ‘New York Living Made Easy’ a reality," Lederer added.

During the third quarter, Duane Reade opened three new stores and closed two stores. As of the quarter’s end, the chain operated 254 stores, up from 245 a year ago.