Rite Aid Corp. exceeded Wall Street's expectations by posting a smaller loss on a slight decline in revenue for its fiscal 2010 first quarter.

Rite Aid, first quarter, drug store, drug store chain, loss, Mary Sammons, same-store sales, pharmacy, Brooks Eckerd, Russell Redman

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Rite Aid narrows first quarter loss

June 24th, 2009
Mary Sammons, Rite Aid CEO

CAMP HILL, Pa. – Rite Aid Corp. exceeded Wall Street's expectations by posting a smaller loss on a slight decline in revenue for its fiscal 2010 first quarter.

The drug store chain reported a net loss of $98.4 million, or 11 cents per diluted share, for the 13 weeks ended May 30, lower than the loss of $156.6 million, or 20 cents per diluted share, from a year earlier.

On average, analysts had forecast a loss of 13 cents per share for the company's fiscal 2010 first quarter, according to Thomson Financial.

Rite Aid noted that the quarterly loss reflects a $67 million noncash charge related to store closings that was partially offset by a $20 million gain on asset sales, including prescription files.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose to $249.2 million, or 3.8% of revenue, in the quarter from $241.1 million, or 3.7% of revenue, a year ago. The company said the $8.1 million gain stems mainly from reduced selling, general and administrative (SG&A) expenses, including store labor and other field controllable expenses.

Total sales in the fiscal 2010 first quarter, meanwhile, dipped 1.2% to $6.5 billion from $6.6 billion in the prior-year period. Rite Aid said the decline resulted primarily from store closings.

Same-store sales for the quarter inched up 0.6%, including a 1.6% increase in the pharmacy and a 1.6% decrease in the front end. The company said pharmacy sales included a 448-basis-point negative impact from new generic introductions, while the number of prescriptions filled climbed 2.2%.

Excluding the acquired Brooks Eckerd stores, same-store sales were up 1.5% versus a year ago, according to Rite Aid.

“We are pleased with our first quarter results as we continued to build on the improvements we made in the last several quarters," Rite Aid chairman and chief executive officer Mary Sammons said in a statement. "We grew pharmacy sales, improved adjusted EBITDA by operating more efficiently and continued to take costs out of the business while at the same time our customer satisfaction ratings improved.”

Rite Aid shares were up 2 cents to $1.28 as of noon trading on Wednesday.

The company also said Wednesday that it has partially completed a refinancing plan launched in the first quarter but that extra interest expenses will result in a larger net loss for fiscal 2010.

In the first quarter, Rite Aid opened 10 stores, relocated 17 stores, remodeled three stores and closed 86 stores. As of May 30, the company operated 4,825 stores.



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