CAMP HILL, Pa. — Buoyed by an uptick in revenue and same-store sales, Rite Aid Corp. turned in a smaller net loss for its fiscal 2013 first quarter.
Rite Aid said Thursday that for the 13-week first quarter ended June 2, revenue rose 1.2% to $6.5 billion from $6.4 billion a year earlier. The company attributed the gain to a rise in comparable-store sales, partially offset by store closings.
Comp-store sales in the quarter were up 2.5% year over year, reflecting increases of 2.7% in the front end and 2.4% in the pharmacy. Rite Aid said comparable pharmacy sales included a 326-basis-point negative impact from generic drug introductions.
The number of prescriptions filled in same stores climbed 3%, driven in part by additional prescriptions stemming from the contract impasse between Walgreen Co. and Express Scripts Inc. Prescription sales represented 68.4% of total drug store sales in the quarter.
On the earnings side, the first-quarter net loss came in at $28.1 million, or 3 cents per diluted share, compared with a net loss of $63.1 million, or 7 cents per diluted share, in the prior-year period. Financial analysts, on average, had forecast a loss of 3 cents per share, with estimates running from a low of a 5-cents-per share loss to a high of a 1-cent-per-share loss, according to Thomson Financial.
Rite Aid noted that the quarterly net loss reflected two items not included in its guidance: a $17.8 million loss, or 2 cents per share, from debt modification with the completion of a previously announced refinancing plan, and a charge of $20.9 million, or 2 cents per share, from a proposed settlement of wage-and-hour class-action lawsuits. The decreased net loss, the company said, resulted from a rise in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and decreases in depreciation and amortization expense and lease termination and impairment charges.
Adjusted EBITDA in the first quarter advanced to $274.2 million, or 4.2% of revenue, from $262.9 million, or 4.1% of revenue, a year ago. Rite Aid said the gain reflected increased gross profit, fueled by increased sales and improved pharmacy gross margin stemming from more generic prescriptions. The increase in adjusted EBITDA was partially offset by litigation expense related to the class-action settlement.
"Our turnaround efforts continue to be successful as demonstrated by our sixth consecutive quarter of increased same-store sales and adjusted EBITDA," Rite Aid chairman, president and chief executive officer John Standley said in a statement.
"During the quarter, we saw strong growth in same-store prescription counts while key initiatives like our popular wellness+ customer loyalty program, enhanced Rite Aid brand offerings and ground-breaking ‘wellness store’ format continued to gain traction," Standley explained. "We’re proud of the hard work and dedication that our entire Rite Aid team has displayed in driving these positive results and look forward to delivering an even better shopping experience to our customers as we move ahead."
During the first quarter, Rite Aid relocated two stores, remodeled 143 stores and closed 15 stores. The drug chain said it had 423 completed remodels to its "wellness store" format by the end of the quarter. As of June 2, the retailer operated 4,652 stores overall.
Looking ahead, Rite Aid pruned the low end of its net loss forecast for fiscal 2013 and shaved its sales estimates.
The company projects a net loss of $103 million to $248 million, or 13 cents to 29 cents per diluted share, for fiscal 2013, up slightly from its previous forecast of between $103 million and $267 million, or 13 cents to 31 cents per diluted share. The retailer also raised the low end of its adjusted EBITDA guidance to between $950 million and $1.025 billion.
Fiscal 2013 revenue is forecast at $25.3 billion and $25.7 billion, compared with the company’s earlier guidance of $25.4 billion to $25.8 billion. Likewise, the drug chain trimmed its same-store sales projection to a decrease of 0.5% to a gain of 1%, compared with its prior outlook of flat to a 1.5% increase.
Rite Aid said it reduced its revenue and comp-store sales guidance because of an increase in the projected negative impact of generic drug introductions on pharmacy same-store sales of 520 to 600 basis points.
