Rite Aid quarterly loss nearly triples on store closures

Drugstore operator Rite Aid Corp., of Camp Hill, said today that its loss nearly tripled in its third quarter because of costs to close stores and continuing struggles for its Brooks Eckerd pharmacies.

The grim economy and other issues also prompted the company to cut its expectations for next year.

In the quarter ended Nov. 29, the company reported a loss of $248.7 million, or 30 cents per share, excluding stock dividends and accretion. A year ago, it lost $93 million, or 12 cents per share. Revenue fell 0.5 percent, to $6.47 billion from $6.5 billion.

Without one-time charges, Rite Aid says its loss was $130.1 million, or 15 cents per share.

Thomson Reuters says analysts expected a loss of 17 cents per share on $6.46 billion in revenue. Their estimates typically exclude one-time items.

The company says it has closed 229 weak stores over the past year. That included 29 store closures in the third quarter. Rite Aid opened 13 stores, moved 23 and remodeled 11, giving it a total of 4,914 at the end of the quarter.

Rite Aid now expects a larger fiscal 2009 loss and weaker same-store sales, pointing to recent sales trends, the recession and the store closures.

The company forecast a fiscal 2009 loss of $593 million to $773 million, or 74 cents to 95 cents per share. Previously Rite Aid expected a loss of $445 million to $535 million, or 56 cents to 67 cents per share. Rite Aid backed maintained its revenue forecast of $26 billion and $26.5 billion.

Analysts were expecting a loss of 69 cents per share and $26.41 billion in revenue.

Rite Aid also lowered its annual estimates at the end of the third quarter, saying it was taking longer than expected to improve the pharmacy results at Brooks Eckerd.

Rite Aid said its same-store sales will rise between 0.5 percent and 1.5 percent in fiscal 2009, down from its prior guidance of 1.5 to 3 percent. Same-store sales are revenue from stores open at least one year, and they are considered a key measurement of retailer health.

Rite Aid's total same-store sales improved 1.4 percent during the quarter, but they fell 2.6 percent at Brooks Eckerd pharmacies. That is a smaller decline than in the second quarter, and non-pharmacy sales for Brooks Eckerd improved from the second quarter. Both pharmacy and non-pharmacy sales at older Rite Aid stores improved.

The company bought 1,850 Brooks Eckerd stores in June 2007.

Shares were down 6 cents, to 45 cents in late morning trading on the New York Stock Exchange.