Rite Aid Corp., of Camp Hill, said today that its fiscal third-quarter loss narrowed as it cut costs, and the drug store chain refinanced debt to improve its balance sheet. But slumping sales in the front of its stores continued to hurt results.
The company said front-end sales, which includes non-pharmacy items like food and cosmetics, fell 2.5 percent in the quarter due to the recession.
"The economy, the 10 percent unemployment rate and the increasingly competitive environment continued to hurt front end sales as customers searched for bargains and cut back on discretionary items," Chairman and chief executive Mary Sammons said in a conference call with analysts.
She said the behavior shift affected all major retail events in the third quarter, including back-to-school shopping, Halloween and Black Friday sales.
Rite Aid said it lost $86.1 million after preferred dividends, or 10 cents per share, in the three months that ended Nov. 28. That's down from a loss of $248.7 million, or 30 cents per share, in the same quarter last year.
Revenue fell 2 percent to $6.35 billion from $6.47 billion.
The results beat Wall Street expectations, sending Rite Aid shares up 14 cents, or 10.5 percent, to $1.47 in morning trading. The stock has ranged from 20 cents to $2.35 over the past year.
Analysts polled by Thomson Reuters forecast, on average, a loss of 18 cents per share on $6.38 billion in revenue.
Rite Aid said sales at stores at least a year declined less than 1 percent. The metric is seen as a key indicator of retailer health because it measures growth from existing locations rather than newly opened ones.
The company attributed its revenue decline to the slumping front-end sales and store closings. Rite Aid closed 14 stores in its fiscal third quarter, while opening three. It has closed more than 100 stores over the past year and operated 4,801 at the end of the quarter.
Rite Aid is the nation's third-largest drugstore operator, trailing Walgreen Co. and CVS Caremark Corp.
Rite Aid said the number of prescriptions filled, which accounts for 69 percent of total drugstore sales, rose 1.5 percent in the quarter, but an increase in generic drugs hurt sales.
The drugstore operator has been working to improve store performance and cut debt.
In October, Rite Aid said it had refinanced all debt that would have been due next September and now has no major debt due until September 2012.
Rite Aid also narrowed its fiscal 2010 outlook Thursday. The company now expects to post a loss between $413 million and $542 million, or 50 cents to 66 cents per share.
In September, the company forecast a full-year loss of $390 million to $615 million, or 48 cents to 74 cents per share.
Rite Aid expects total sales of between $25.6 billion and $25.9 billion.