News

Drugstore operator Rite Aid Corp. RAD-N on Thursday reported a smaller second-quarter loss than a year ago, but lowered its expectations for the fiscal year due to the weak economy and high unemployment.

Rite Aid said economic conditions particularly hurt for sales of nonpharmacy, or “front end,” items like food and cosmetics. It also expects weaker profit margins.

In premarket trading, Rite Aid shares lost 19 cents, or 9.7 per cent, to $1.76. The company is 28.5-per-cent owned by Canada's Jean Coutu Group.

The Camp Hill, Pa., company said it lost $120.4-million (U.S.), or 14 cents per share, after preferred dividends in the three months ended Aug. 29. That compares with a loss of $227.4-million, or 27 cents per share, a year ago.

Analysts expected a larger loss of 16 cents a share for the latest quarter, according to Thomson Reuters.

Revenue fell 3 per cent to $6.3-billion from $6.5-billion a year ago and missed Wall Street estimates of $6.4-billion. The company has closed more than 100 stores over the last year, including 13 in the latest quarter.

For the full year ending in February, Rite Aid now expects to lose $390-million to $615-million, or 48 cents to 74 cents per share. In June, it projected a loss of $265-million to $490-million, or 33 cents to 59 cents per share. It cut its revenue forecast to a range of $25.7-billion to $26.2-billion from $26.3-billion to $26.7-billion.

Analysts expect a loss of 47 cents per share and $26.09-billion in revenue.

The company expects same-store sales to come in between a 1-per- cent decrease and a 1-per-cent increase. Previously Rite Aid said those sales would rise 0.5 per cent to 2.5 per cent.

In the second quarter, Rite Aid lowered its selling, general and administrative expenses to $1.65-billion from $1.78-billion a year ago, and also reported lower lease termination and impairment charges, and a smaller loss on debt modification and retirements.

Rite Aid said its same-store sales fell 1.1 per cent for the quarter, with front end sales down 4.9 per cent and pharmacy revenue rising 0.8 per cent at those stores. Same-store sales, or sales at locations open for at least a year, are seen as a key measurement of retailer health.

At the end of the quarter, Rite Aid ran 4,812 stores in 31 states and Washington, DC. During the second quarter, it closed 16 stores, opened three, relocated 10 and remodelled one location. It plans to close about 117 stores this fiscal year.