Rite Aid: No Profit Today, No Profit Tomorrow

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Close, as we all know, is good only in horseshoes, handgrenades and hydrogen bombs. But will the market reward Rite Aid (RAD Quote) today for getting closer to profit, despite not actually achieving it -- or, for that matter, planning on achieving it anytime soon?

The answer is yes. Shares of Rite Aid jumped 4% to $1.31 in morning trading.

The drugstore announced this morning that it narrowed its loss in the first quarter -- but said it actually expects a greater deficit for the year because of refinancing expenses.

The company recorded a loss of $98.4 million during the quarter, or 11 cents a share, compared with a loss of $156.6 million, or 20 cents, in the year-ago period. Analysts expected a loss of 13 cents a share.

The results included a $67 million non-cash charge related to store closings and a $20 million gain on asset sales, including prescription files.

Its revenue slipped 1% to $6.53 billion, hurt by the closure of 86 stores. The company plans to shutter 117 stores as part of its plan to trim expenses and turn to a profit.

Despite all that, total same-store sales actually grew .6%, while prescriptions rose 2.2%. Indeed, a reading of reports from across the sector show that consumers appear to be shopping in drugstores only for necessities, and shunning front-end items like hair care and cosmetics.

Rite Aid announced that its refinancing is partly complete, but because of greater interest expenses, it will post a larger loss in fiscal 2010.

And it's not so peachy for other drugstores either. Earlier in the week rival Walgreen posted a 9% dip in its third-quarter earnings, hurt by sluggish sales of non-pharmacy items.