By Chelsea Stevenson
Rite Aid Corp.'s (RAD) fiscal first-quarter loss narrowed as the drug-store company saw a continued increase in same-store sales and improved margins.
Rite Aid narrowed its outlook for the year, pointing to the impact of new generic introductions on it same-store sales. It now expects a loss of 13 cents to 29 cents a share, on revenue between $25.3 billion and $25.7 billion, from its April forecast of a loss of 13 cents to 31 cents on revenue of $25.4 billion to $25.8 billion. The company adjusted its same-store sales to be between a 0.5% decrease and a 1% increase, compared with its previous estimate of a 1.5% increase.
The No. 3 U.S. drug-store chain behind Walgreen Co. (WAG) and CVS Caremark Corp. (CVS) has posted losses since its 2007 acquisition of the Brooks and Eckerd chains that saddled it with debt just before consumers reduced spending. Still, the latest period marked the company's 6th consecutive quarter reporting an increase in same-store sales, with 2.5% growth. Front-end sales rose 2.7%, while pharmacy sales climbed 2.4%.
The number of prescriptions filled in same stores increased 3%, benefiting from the dispute between Walgreen and Express Scripts Holding Co. (ESRX). Analysts have expected Rite Aid and CVS to gain market share as a result of the Express Scripts exit from Walgreen's network.
In the latest quarter Rite Aid remodeled 143 stores, many of which now have more clinical pharmacy services; the company ended the quarter with a total of 4,652 stores.
For the quarter ended June 2, Rite Aid recorded a loss of $28.1 million, or three cents a share, from the year-ago loss of $63.1 million, or seven cents a share. The latest quarter included a $17.8 million debt modification charge from refinancing, among other things.
Revenue grew 1.2% to $6.47 billion as higher same-store sales helped offset store closings.
Analysts polled by Thomson Reuters most recently projected a loss of four cents on revenue of $6.43 billion.
Gross margin rose to 27% from 26.5%.
On Tuesday, rival Walgreen reported its fiscal third-quarter earnings fell 11% as the drug store chain watched sales continue to decline.
Rite-Aid shares closed Wednesday at $1.17 and were inactive premarket. The stock is off 37% in the last three months.
Write to Chelsea Stevenson at firstname.lastname@example.org