June 24, 2009 / 12:51 PM / 9 years ago

UPDATE 3-Rite Aid posts smaller-than-expected loss

 * Rite Aid loss narrows to $0.11/share vs $0.20 yr ago
 * Excluding items loss $0.06 vs Wall St view loss $0.13
 * Revenue falls 1.2 pct to $6.5 bln
 * Shares up 4 percent to $1.31  (Adds analyst, company comments, byline; updates stock move)
 By Jessica Wohl
 CHICAGO, June 24 (Reuters) - Rite Aid Corp (RAD.N) posted a narrower than expected loss on Wednesday as it kept a tight lid on expenses, and its shares rose even though this year’s loss could be wider than anticipated due to refinancing moves.
 The No. 3 U.S. drugstore chain, which posted its eighth quarterly loss in a row, has been reducing its debt level, closing some stores and revamping others as it continues to digest its 2007 acquisition of the Brooks and Eckerd stores.
 Meanwhile, shoppers at Rite Aid and larger rivals CVS Caremark Corp (CVS.N) and Walgreen Co WAG.N have been spending cautiously and even skipping trips to the doctor as they deal with the recession, putting pressure on sales.
 Rite Aid refinanced a major portion of its September 2010 debt maturities and improved cash flow and liquidity during the quarter. It cut its debt level by more than $320 million to $5.69 billion. The chain has also cut costs with changes such as moving store managers at 1,750 low-volume locations to hourly pay from salaries.
 “Overall, while the company is still in the beginning stages of what is likely to be a multi-period turnaround, we believe (first-quarter) results showed meaningful signs of improvement,” Raymond James analyst John Ransom said in a note to clients. He rates the shares “outperform.”
 Rite Aid’s loss narrowed to $98.4 million, or 11 cents per share, in the first quarter ended May 30, from $156.6 million, or 20 cents per share, a year earlier.
 Excluding a $67 million noncash charge for store closings and a $20 million gain on asset sales, the loss was 6 cents per share, topping the analysts’ average forecast for a loss of 13 cents, according to Reuters Estimates.
 The results came two days after Walgreen posted a steeper-than-expected 8.7 percent drop in quarterly profit. [ID:nN22495005] Walgreen and Rite Aid are each decreasing the number of items they keep in stock and remodeling stores.
 Rite Aid’s first-quarter revenue slipped 1.2 percent to $6.53 billion, due largely to store closings. Sales at stores open at least a year rose 0.6 percent.
 On a same-store basis, sales rose 1.6 percent in the pharmacy section and fell 1.6 percent for general merchandise. Same-store sales fell at the former Brooks and Eckerd stores Rite Aid bought from Canada’s Jean Coutu PJCa.TO in 2007, but those stores are showing signs of improvement.
 Rite Aid feels good about prescription growth so far in June, while sales of summer merchandise have been weak, due in part to poor weather, President and Chief Operating Officer John Standley said during a conference call.
 Rite Aid and Walgreen are slated to report their June sales results next week. CVS does not issue monthly sales reports.
 Rite Aid received commitments for $960 million of its proposed new $1 billion senior secured revolving credit facility due September 2012, which it will use to refinance the rest of its existing revolving credit facility.
 As a result of the refinancing, which will raise interest expense, Rite Aid now expects to lose 33 to 59 cents per share this year, compared with a previous forecast for a net loss of 26 to 53 cents. Analysts on average expected a loss of 43 cents.
 The company said it still expects fiscal 2010 sales of $26.3 billion to $26.7 billion, with same-store sales up 0.5 percent to 2.5 percent.
 Rite Aid closed 86 stores during the quarter. It had 4,825 in operation at the end of the first quarter, down from 5,004 a year earlier.
 Shares of Rite Aid were up 5 cents, or 4 percent, at $1.31 after climbing to $1.38 in morning trading.  (Reporting by Jessica Wohl; Editing by Derek Caney, Lisa Von Ahn and Matthew Lewis)     

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below