Duane Reade's Earnings Drop
Duane Reade (DRD) reported a decline in third-quarter earnings, citing the power outage in August, a higher tax rate and lower pharmacy sales momentum.
But the company issued fourth-quarter and full-year guidance in line with the analyst consensus, sending its shares up 25 cents, or 1.9%, to $13.74 in recent trading.
In the quarter ended Sept. 27, the pharmacy chain earned $1.9 million, or 8 cents a share, compared with $7.8 million, or 32 cents a share, in the prior-year period. Analysts were calling for 9 cents a share. The company said it had a higher tax rate of 44%, from 38.6% a year ago. On Oct. 6, Duane Reade had
Sales rose 8.3% to $338.6 million. Pharmacy sales increased 13.5%, making up 44% of total sales. Same-store sales rose 3%, with pharmacy same-store sales up 8.6%.Duane Reade said sales were impacted by the weak economy in its New York market, the power outage in August and lower pharmacy revenue. The decline in pharmacy sales resulted in part from certain prescriptions that changed to over-the-counter medications and more prescriptions of generic drugs, the company said. "A generally weak economy and related persistent unemployment continue to challenge overall sales growth," said Chief Executive Anthony J. Cuti. "In addition, although our pharmacy sales are performing at levels equal to or greater than our primary competitors, the general industry downturn which has reduced prescription growth rates by 50% was a factor in the greater than anticipated sales shortfall during the third quarter." The company anticipates fourth-quarter sales to be $362 million to $367 million, with same-store sales up 3.3% to 4.3%. Earnings are estimated at 17 cents to 22 cents a share. Wall Street expects a profit of 20 cents a share with revenue of $355.4 million. In the full year, sales are forecast at $1.389 billion to $1.394 billion, with same-store sales up 2.8% to 3%. Earnings are expected to be 55 cents to 61 cents a share. Analysts are calling for 58 cents a share on sales of $1.388 billion.
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