Rite Aid loss a bit smaller as revenue stabilizes

AP News
Posted: Apr 07, 2011 6:12 PM
Rite Aid loss a bit smaller as revenue stabilizes

Rite Aid Corp. said Thursday that its fourth-quarter loss was slightly smaller than a year earlier as its revenue stabilized after more than two years of declines.

The Camp Hill, Pa., drugstore chain operator said it may reduce its losses significantly in fiscal 2012, and forecast stronger revenue than analysts expected. Its shares rose 2 cents, or 1.9 percent, to close at $1.08 Thursday.

"We made a lot of progress on our key initiatives in the fourth quarter and they're clearly starting to make an impact," said President and CEO John Standley. The retailer is the third biggest U.S. drugstore company after Walgreen Co. and CVS Caremark Corp.

The company said its Wellness Plus rewards program has been popular with customers. There are now about 36 million members in the loyalty card program, which was introduced in April 2010. Rite Aid said Wellness Plus members spend more money when they shop at Rite Aid and gold and silver members visit the stores more often.

Rite Aid said it is doing more business at is value stores and at Rite Aid Save-A-Lot stores, which include grocery sections. The company plans to remodel 500 stores this year as it rolls out a new wellness store format that includes more organic food, natural personal care products, and homeopathic medicines. It is also working to improve sales of store brand merchandise and will offer immunizations like flu shots at all stores.

Rite Aid reported a net loss of $208.1 million, or 24 cents per share, for the three months that ended Feb. 26 compared with a loss of $210.6 million, also 24 cents per share, a year ago.

Revenue held steady at $6.46 billion after declining for 10 consecutive quarters. Revenue at stores fell slightly.

Analysts expected a loss of 24 cents per share and $6.41 billion in revenue, according to FactSet.

Rite Aid's revenue at locations open at least a year rose 1 percent from a year earlier, and the company said it cut its administrative expenses. But its lease termination and impairment costs nearly doubled to $154 million.

Revenue at locations open at least a year is a key indicator of a retailer's long-term health because it excludes stores that recently opened or closed. Rite Aid had reported 18 consecutive months of declines in the figure, but it rose for each month in the fourth quarter.

Rite Aid has closed about 300 stores in recent years, eliminating some of its weakest-performing locations but contributing to the decline in its revenue. Rite Aid had 4,714 stores around the country as of Feb. 26, down from 4,780 a year earlier. In the fourth quarter, the company closed 17 stores, relocated four and remodeled two.

The closings followed Rite Aid's purchase of 1,835 Brooks Eckerd drugstores in June 2007. The company took on billions of dollars in debt in the deal and has struggled to improve results at the Brooks Eckerd stores.

Rite Aid said it lost $564.9 million, or 64 cents per share, in fiscal 2011 as it reported greater interest costs and took losses on debt modifications and retirement. The previous year it lost $515.6 million, or 59 cents per share. Rite Aid's revenue fell 2 percent to $25.21 billion from $25.67 billion.

The company forecast a loss of $370 million to $560 million, or 42 cents to 64 cents per share, for fiscal 2012. It said its revenue will improve to $25.7 billion to $26.1 billion. It said sales at locations open at least a year will rise 0.5 percent to 2 percent after falling 0.7 percent the previous year.

Analysts expect a loss of 52 cents per share on $25.1 billion in revenue on average.