Rite Aid narrows first quarter losses on lower expenses
Retail drugstore chain Rite Aid Corp. (NYSE:RAD) narrowed first quarter losses on Thursday, driven by a decline in expenses and stronger same store sales growth, as shares rose nearly 4%.
In the morning, Rite Aid's shares were up 3.64%, or 4 cents to $1.14 as of 9:43 a.m. EST.
For the three months ending May 28, the drug retailer posted a loss of $63.1 million, or 7 cents a share, versus $73.7 million, or 9 cents a share a year earlier. Analysts expected a loss of 12 cents a share, according to Reuters.
The reduction in net loss is the result of lower selling, general and administrative, as well as interest expense costs, the company said.
The results were partially offset by a decline in front-end store margins due to investments in the company's customer loyalty program, as well as a $22.4 million loss on debt modification related to the refinancing of the company's $343 million term loan in March.
Sales for the quarter fell flat at $6.4 billion, as positive growth in same store sales was offset by store closings. Comparable store sales rose marginally by 0.8% over the prior year period.
Front-end same store sales remained flat, while pharmacy comparable sales grew 1.1%, despite a 145-basis point negative impact due to new generic introductions.
Prescription sales accounted for 68.7% of total drugstore sales, while third party prescription revenue contributed 96.5% of pharmacy sales, Rite Aid said.
Gross margin fell slightly to 26.5% from 26.8% a year earlier.
The third largest drugstore retailer in the U.S. reaffirmed its fiscal 2012 outlook, saying it expects sales to be between $25.7 and $26.1 billion, with same store sales to increase from 0.5% to 2% over last year. It also continues to expect a net loss in the range of $370 and $560 million, or a loss per diluted share of between $0.42 to $0.64.
Analysts expect the company will report a loss of 53 cents a share on revenues of $25.65 billion.
During the first quarter, the company closed 10 stores, with 4,704 stores in operation at the end of the period across 31 US states and in the District of Columbia.
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