Rite Aid Q3 Profit Matches Estimates; Updates FY14 Outlook

(RTTNews) - Rite Aid Corp. (RAD) reported third-quarter net income of $71.5 million, compared to $61.9 million, a year ago. Income attributable to common stockholders was $43.10 million or $0.04 per share, compared to $60.53 million or $0.07 per share, prior year.

The company said the improvement in net income resulted primarily from decreases in interest expense and lease termination and impairment charges, partially offset by a higher LIFO charge and an $18.1 million benefit from the settlement of interchange fee litigation in the prior year third quarter.

Third-quarter earnings per share were negatively impacted by $0.03 due to the redemption of the company's Series G and Series H Convertible Preferred Stock on Sept. 30, 2013. The company's prior year's results included an $18.1 million or $0.02 per share benefit from the settlement of interchange fee litigation.

On average, nine analysts polled by Thomson Reuters expected the company to report profit per share of $0.04 for the quarter. Analysts' estimates typically exclude special items.

Revenues for the 13-week quarter were $6.36 billion, compared to $6.24 billion. Revenues increased 1.9 percent primarily as a result of an increase in pharmacy same store sales. Same store sales for the quarter increased 2.3 percent, consisting of a 3.5 percent increase in pharmacy sales, partially offset by a 0.2 percent decrease in front end sales. Analysts expected revenue of $6.32 billion for the quarter.

Adjusted EBITDA was $282.3 million compared to $295.3 million, last year. Prior year adjusted EBITDA included an $18.1 million benefit from the settlement of interchange fee litigation. The company's current quarter's adjusted EBITDA benefited from an increase in pharmacy gross profit, driven by script count growth, and strong SG&A expense control, offset by a decrease in front-end gross profit.

Rite Aid updated its fiscal 2014 guidance with sales expected to be between $25.3 billion and $25.425 billion and same store sales to range from an increase of 0.35 percent to 0.85 percent. Adjusted EBITDA guidance is now expected to be between $1.250 billion and $1.280 billion and net income is now expected to be between $204.0 million or $0.17 per share and $259.0 million or $0.23 per share. Analysts expect the company to report fiscal 2014 profit per share of $0.24, and revenue of $25.36 billion.