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4-Traders Homepage  >  Equities  >  Nyse  >  Rite Aid Corporation    RAD

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Rite Aid 4Q Loss Narrows Amid Sales Growth, Tax Benefit

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04/12/2012 | 05:55pm CET

--Same-store sales improve for five straight quarters with rollout of loyalty program and renovated stores

--Rite Aid converted 280 stores into new wellness format in the latest quarter

--Shares decline as loss was greater than analysts expected and new fiscal-year outlook was tempered

(Updates the second through eighth paragraphs with details from Rite Aid's conference call and the latest stock quote and the 13th paragraph with more details on fiscal 2013 outlook.)

 
   By John Kell and Tess Stynes 
   Of  
 

Rite Aid Corp.'s (>> Rite Aid Corporation) fiscal fourth-quarter loss narrowed as the drug-store company benefited from an extra week of sales and a tax benefit in the latest period.

Shares fell 7 cents, or 4.1%, to $1.63 in recent trading Thursday as the chain's loss was greater than analysts expected and its view for the new fiscal year was tempered.

The No. 3 U.S. drug-store chain behind Walgreen Co. (WAG) and CVS Caremark Corp. (>> CVS Caremark Corporation) has posted losses since its 2007 acquisition of the Brooks and Eckerd chains that saddled it with debt just before consumers slashed spending. It has benefited from cutting costs and refinancing billions of dollars in debt, and the company has seen sales growth recently after a long stretch of declines.

Rite Aid's same-store sales have improved for the past five quarters as the company benefits from the rollout of a loyalty program and store renovations under a new format that expands clinical pharmacy services and offers more health and wellness products. Rite-Aid converted 280 stores into the new wellness format during the latest quarter, and, while still early in that process, President and Chief Executive John Standley said the effort was helping bolster front-end sales.

Standley told analysts during the company's conference call that enrollment in the Wellness+ loyalty program, which was launched in April 2010, has reached 52 million members and with two years of membership activity the drug-store chain has enough history and data to monitor active members who have used their cards at least twice in the last 26 weeks.

Rite Aid said those members accounted for 74% of front-end sales and 68% of prescriptions filled during the fourth quarter, compared with 66% and 58%, respectively, in the same period a year ago.

The company's effort to offer more flu immunizations, meanwhile, resulted in nearly 1.5 million flu shots administered in the latest fiscal year, more than double the prior year's total. That improvement came amid a mild cold and flu season that hurt the latest quarterly results from CVS and Walgreen.

Standley also noted a marketing campaign helped court customers forced to shift their prescriptions away from Walgreen after that drug-store chain exited from pharmacy-benefit manager Express Scripts Holding Co.'s (ESRX) network following a contract dispute. Roughly a third of Rite Aid stores are within a mile of a Walgreen location, and analysts have said the dispute will allow Rite-Aid and CVS to each gain market share.

For the quarter ended March 3, Rite Aid reported a loss of $161.3 million, or 18 cents a share, from a year-earlier loss of $205.7 million, or 24 cents a share. The latest period included $56.3 million in termination and impairment charges, along with a $24.2 million tax benefit, while the prior year included $154.1 million in charges and a small tax expense.

Analysts polled by Thomson Reuters most recently projected a loss of 14 cents.

Gross margin fell to 24.9% from 26.4%.

Rite Aid recently reported total drug-store sales of $7.12 billion, up 11% from a year earlier, mostly owing to an extra week of sales in the period. Same-store sales improved 3%, the drug-store chain's best showing in five years. Last week, Rite-Aid said that March same-store sales improved further, up 3.6%.

Looking to fiscal 2013, Standley said Rite Aid intends to remodel 500 stores into the wellness format and will focus on the Wellness+ program as the core component of the company's overall marketing and promotional efforts.

For the year, the company projected a per-share loss of 13 cents to 31 cents on revenue of $25.4 billion and $25.8 billion. Analysts polled by Thomson Reuters recently expected a loss of 25 cents and revenue of $25.74 billion. Rite Aid expects same-store sales growth of up to 1.5% over the just-completed fiscal year.

-By John Kell and Tess Stynes, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

Stocks mentioned in the article : Rite Aid Corporation, CVS Caremark Corporation
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Financials ($)
Sales 2017 32 800 M
EBIT 2017 676 M
Net income 2017 126 M
Debt 2017 6 848 M
Yield 2017 -
P/E ratio 2017 66,77
P/E ratio 2018 45,13
EV / Sales 2017 0,48x
EV / Sales 2018 0,46x
Capitalization 8 880 M
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Mean consensus HOLD
Number of Analysts 6
Average target price 8,58 $
Spread / Average Target 1,7%
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Managers
NameTitle
John T. Standley Chairman & Chief Executive Officer
Kenneth A. Martindale President & Chief Operating Officer
Darren W. Karst SEVP, Chief Financial & Administrative Officer
Steve Rempel Chief Information Officer & Senior Vice President
Joseph B. Anderson Independent Director
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