Shares of Rite Aid Corp. slumped 11.2 percent to $1.50 after the firm posted a reduced but larger-than-expected fourth-quarter loss and issued a disappointing forecast for the new fiscal year.
For the three months ended Feb. 27, the Camp Hill, Pa.-based drugstore chain registered a net loss of $208.4 million, or 24 cents a diluted share, steeper than the 19 cent loss expected, on average, by Wall Street analysts surveyed by Yahoo Finance. This compared with a net loss of $2.29 billion, or $2.67 a share, in the same period a year ago. Stripping out noncash charges for items including goodwill and store impairment, last year’s quarterly loss was $116.9 million or 14 cents a share, the company noted.
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Revenues in the quarter slid 3.6 percent to $6.46 billion, from $6.71 billion last year, primarily as a result of 22 store closings and a 2.4 percent decline in comparable-store sales, the firm said. The comp decline consisted of a 2.6 percent decrease in front-end sales and a 2.4 percent decrease in pharmacy sales, according to the company, which added that the number of prescriptions filled in stores open in both periods decreased 1.7 percent from the prior-year period. Prescription sales accounted for 66.6 percent of total drugstore sales, the firm added.
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Stores in operation at the end of the fourth quarter totaled 4,780, Rite Aid noted.
An improvement in front-end margin and good selling, general and administrative cost control were not enough to offset the decline in pharmacy margin, Rite Aid noted.
“It was a difficult quarter with continued weak consumer demand, a weaker cough, cold and flu season than last year and continued pressure on pharmacy reimbursement,” stated Mary Sammons, Rite Aid’s chairman and chief executive officer. “But our team did a good job of improving front-end margins and holding tight on expenses. Thanks to our working capital initiatives, we moved into the new fiscal year with a strong liquidity position.”
However, the firm forecast a net loss of between 41 cents and 65 cents a diluted share for the new year, above the 36 cent loss previously anticipated by analysts. Rite Aid also said it anticipates sales of $25.2 billion to $25.6 billion, below last year’s total, with comps expected to range between a 1 percent increase and a 1 percent decrease.
For the full year, Rite Aid posted a net loss of $506.7 million, or 59 cents a share, compared with a year-ago loss of $2.92 billion, or $3.49 a share, on revenues that decreased 2.4 percent to $25.67 billion, from $26.3 billion the year before. The firm attributed the decline in yearly revenues to the closing of 121 stores during the year. Same-store sales for the full year were down 0.9 percent.