Rite Aid 3Q loss narrows as sales climb
Friday, December 16, 2011
NEW YORK (AP) — Rite Aid Corp.’s sales continued to grow in the fiscal third quarter as the drugstore operator signed up 3 million new members to its customer rewards program and administered more flu shots.
The third-largest U.S. drugstore chain reported a smaller third-quarter loss, and for the second straight quarter, it trimmed its projected loss for fiscal 2012
Its shares rose 4 cents, or 3.5 percent, to close at $1.18 Thursday. The stock is up 34 percent in the year to date.
Rite Aid said Thursday it lost $54.5 million, or 6 cents per share, in the quarter ended Nov. 26. That compares to a loss of $81.5 million, or 9 cents per share, a year ago.
Revenue climbed nearly 2 percent to $6.31 billion from $6.2 billion.
Analysts surveyed by FactSet expected, on average, a loss of 12 cents per share on $6.29 billion in revenue.
Rite Aid has posted a string of quarterly losses dating to 2007, but its sales have improved in the past two quarters. The company is closing fewer stores after shuttering hundreds of locations over the last few years, and sales at its remaining locations have been growing for about a year.
The Camp Hill, Pa., company says it now has 47 million Wellness Plus members, who tend to shop at Rite Aid more often and spend more money than non-members. It launched the rewards program in April 2010.
During the quarter, the company converted more than 100 stores to a new wellness format which feature more organic food, natural personal care products and homeopathic medicines. Rite Aid now has 159 of those stores and expects to operate about 300 of them by the end of the fiscal year. It has been spending more money on store improvements and on Wellness Plus.
However, during the quarter Rite Aid reported lower expenses related to lease terminations and other items, and it deferred less revenue from Wellness Plus.
Rite Aid has delivered more than 1.4 million flu shots during the current flu season — more than double the 675,000 it gave during the 2010-11 flu season even though this season has been milder than last year.
Rite Aid could pick up additional sales from larger competitor Walgreen Co., which is in the middle of a contract dispute with pharmacy benefits management company Express Scripts Inc. Express Scripts pays drugstores like Walgreen to fill prescriptions, but if the companies do not agree to a new contract in the next few weeks, Express Scripts clients won’t be able to fill prescriptions at Walgreen stores.
Analysts say that could bring many new shoppers to Rite Aid and CVS Caremark Corp. stores. However, Rite Aid did not say how many new customers or how much revenue it might gain if Walgreen stops filling prescriptions for Express Scripts.
The company now expects a fiscal 2012 loss of between $325 million and $440 million, or 37 cents to 50 cents per share, on revenue ranging from $25.85 billion to $26 billion. Three months ago, Rite Aid cut its projected loss for the year to $345 million to $495 million, or 40 cents to 56 cents per share, on revenue of $25.8 billion to $26.1 billion.
Analysts expect a loss of 44 cents per share on $25.79 billion in revenue.
Rite Aid had 4,679 stores as of Nov. 26, down 62 from a year ago. The company expects to close about 25 stores during the fiscal fourth quarter. Rivals CVS and Walgreen both have well over 7,000 stores.
Tom Murphy contributed to this story from Indianapolis.