Another profitable quarter, Rite Aid breaks out

AP News
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Posted: Apr 10, 2014 9:05 AM

Rite Aid is out of the recovery ward and appears ready to break into a sprint after booking its sixth-straight quarterly profit and announcing an acquisition that aims to strengthen the drugstore chain's foothold in the burgeoning health care market.

Shares, which had slumped below $1 by late 2012, soared before markets opened Thursday after the retailer topped Wall Street expectations for the fourth-quarter.

The company earned $56.7 million, or 6 cents per share, in the quarter that ended March 1. That beat average analyst projections by 2 cents, according to FactSet.

It also represented a 54 percent drop from the previous year's final quarter, when it benefited from a "last-in-first-out," or LIFO, inventory credit of more than $175 million. That compares to a $44.1 million charge in the recent quarter.

LIFO is an accounting method for inventory that assumes a company sells its newest inventory first, and takes a credit or charge according to anticipated inflation.

Revenue of $6.6 billion in the quarter that ended last month also edged out analyst expectations.

Rite Aid Corp. also said Thursday that it acquired RediClinic, which runs retail health clinics in or next to grocery stores in Texas. The company plans to expand the 30-clinic chain and add some to its existing stores.

Rite Aid, based in Camp Hill, Pa., runs about 4,600 drugstores in 31 states and the District of Columbia, ranking it third in size behind Walgreen Co. and CVS Caremark Corp.

A year ago, the company booked its first annual gain in six years. It has working aggressively to clean up its performance, closing underperforming stores and installing a new wellness theme in others. The stores, which Rite Aid introduced in 2011, offer more organic food and natural personal care products and a line of home fitness equipment that Rite Aid helped design.

Employees are now equipped with iPads to look up information on vitamins, find and print coupons, or enroll customers in services like automated pharmacy refills.

Walgreen and CVS also are pushing health care as drugstores vie for more business from both aging Baby Boomers with growing health needs and millions of people who are expected to gain health insurance coverage under the health care overhaul.

Rite Aid shares had climbed more than 10 percent, or 65 cents, to $7.05 less than an hour before markets opened Thursday. That continued a tear the stock has been on since last year, when the shares more than tripled.