Rite Aid Q3 Profit Meets View, Revises Full Year Outlook

(RTTNews) - Retail drugstore chain operator Rite Aid Corp. (RAD) Thursday reported third-quarter earnings that matched Wall Street estimates, while revenues topped view. However, the company tightened its profit forecast for the year and lowered the revenue outlook. The stock fell nearly 10 percent in pre-market trading.

Net income increased to $71.55 million from $61.87 million, amid decreases in interest expense and lease termination and impairment charges. The latest results were impacted by $0.03 per share due to the redemption of the company's Series G and Series H Convertible Preferred stock on September 30. Prior-year results included a $0.02 per share benefit from the settlement of interchange fee litigation.

Income attributable to common stockholders declined to $43.11 million from $60.53 million. Earnings per share fell to $0.04 from $0.07.

On average, 9 analysts polled by Thomson Reuters expected earnings of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased to $6.358 billion from $6.238 billion in the previous year, exceeding Wall Street estimate of $6.32 billion. Revenues rose 1.9 percent primarily due to an increase in pharmacy same store sales.

Same store sales increased 2.3 percent over the prior year's 13-week period, consisting of a 3.5 percent increase in pharmacy sales, partially offset by a 0.2 percent decrease in front end sales.

Pharmacy sales included an approximate 88 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.7 percent.

Prescription sales accounted for 68.6 percent of total drugstore sales, and third party prescription revenue formed 97.1 percent of pharmacy sales.

Rite Aid Chairman and CEO John Standley said, "Our solid third quarter results were driven by the continued success of our key wellness initiatives, specifically the strong start to our flu immunization campaign, and the completion of additional Wellness stores, which now represent nearly a quarter of all Rite Aid stores."

In the third quarter, the company relocated four stores and remodeled 94 stores, bringing the total number of wellness stores chainwide to 1,117. The company had a total store count of 4,595 at the end of the third quarter.

For 2014, Rite Aid now expects net income to be between $204 million or $0.17 per share and $259 million or $0.23 per share. Sales are expected to be between $25.3 billion and $25.425 billion and same store sales are estimated to range from an increase of 0.35 percent to 0.85 percent.

The previous forecast was for net income between $182 million or $0.18 per share and $268 million or $0.27 per share. Sales were estimated to be between $25.1 billion and $25.3 billion and same store sales were expected to range from a decrease of 0.50 percent to an increase of 0.50 percent.

Analysts look for earnings of $0.24 per share on revenues of $25.36 billion.

RAD, which closed at $5.76 on Wednesday, is declining 9.7 percent in pre-market trading.