Rite Aid Q4 Profit Surges On Tax Benefit

(RTTNews) - Retail drugstore chain Rite Aid Corp. (RAD) Wednesday said fourth-quarter profit increased significantly from the previous year, reflecting a tax benefit. Revenues topped Wall Street estimates, supported by good growth in same store sales, and the company also issued its forecast for the current fiscal.

Net income surged to $1.835 billion or $1.79 per share from $55.4 million or $0.06 per share in the comparable quarter last year. The latest results included an income tax benefit of $1.716 billion or $1.67 per share.

Pre-tax income for the fourth quarter was $119.1 million or $0.12 per share compared to $49.4 million or $0.05 per share last year. Pre-tax income was favorably impacted by a LIFO credit of $23.5 million in the current year and a charge of $44.1 million last year.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings per share of $0.07 for the quarter. Analysts' estimates typically exclude special items.

Revenues grew to $6.85 billion from $6.60 billion, primarily as a result of a 4.5 percent increase in same store sales. Analysts expected revenue of $6.80 billion for the quarter.

Same store sales growth consisted of a 5.7 percent increase in pharmacy sales and a 2 percent growth in front-end sales. Meanwhile, Pharmacy sales included a negative impact of 128 basis points from new generic introductions.

The number of prescriptions filled in same stores increased 3.5 percent and Prescription sales accounted for 68.1 percent of total drugstore sales.

In the quarter, the company relocated three stores, remodeled 115 stores and expanded 2 stores, bringing the total number of wellness stores chainwide to 1,634.

Rite Aid also opened one store, acquired two stores and closed five stores, resulting in a total store count of 4,570 at the end of the quarter.

Rite Aid Chairman and CEO John Standley said, "In the fourth quarter, our strong growth in same-store sales and prescription count as well as strong cost control helped drive continued profitability."

For fiscal 2016, the company expects net income to be between $190 million and $275 million or income per share of $0.19 to $0.27. This guidance is net of estimated income tax expense of $0.13 to $0.18 per share.

Sales are expected to be in the range of $26.9 billion to $27.4 billion and same store sales are expected to range from an increase of 2.5 percent to an increase of 4.5 percent over Fiscal 2015.

Analysts expect the company to report earnings per share of $0.43 on revenue of $27.19 billion.

The stock, which closed down 1.7 percent on Tuesday at $8.69, rose moderately in pre-market trading.