Rite Aid Posts Loss, Sees More Ahead

Its fourth-quarter loss is wider than expected and full-year outlook reveals continued losses are likely.
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Rite Aid

(RAD) - Get Report

slumped Thursday on a wider-than-expected fourth-quarter loss and cautious 2009 guidance that portends more of the same ahead.

The drug store chain posted a net loss of $952.2 million, or $1.20 a share, compared to net income of $15.1 million, or a penny a share, a year ago. The quarterly loss reflects a non-cash income tax charge of $894.9 million, or $1.12 a share -- which, if excluded, would amount to a per-share loss of 8 cents. That's still shy of the 7-cent per-share loss that Wall Street was expecting, however.

Rite Aid generated revenue of $6.82 billion, up some 50% from $4.53 billion a year ago but slightly under the $6.87 billion analysts were anticipating.

In June, Rite Aid acquired 1,854 Brooks Eckerd stores and distribution centers. Excluding these acquired stores, Rite Aid said, same-store sales for the 13-week fourth quarter rose 1.3% over the prior year's 13-week period. The figures reflect a 1.4% increase in pharmacy same-store sales and a 1% increase in front-end same store sales.

Fourth-quarter adjusted EBITDA came to $276.3 million, or 4% of revenue, compared to $201 million, or 4.4% of revenue, a year ago. The company chalks up the $75.2 million increase to the additional revenue generated by the acquired Brooks Eckerd stores and improved gross margin rates.

"During the quarter we increased pharmacy sales, filled more prescriptions, improved front-end sales and grew gross margin rates, and we did it as worries about a recession increased and retail sales softened in general," CEO Mary Sammons said.

The company also offered forward guidance that reflects "current trends, continued integration activities and an expectation that the challenging economic environment will continue." Rite Aid expects a net loss for fiscal 2009 of $260 million to $375 million, or 34 cents to 48 cents a share, on sales of $26.7 billion to $27.2 billion in fiscal 2009. According to Thomson First call data, Wall Street is expecting a 2009 loss of 18 cents a share on $27.6 billion in revenue.

Rite Aid also expects a 2%-4% improvement in same-store sales over 2008 and adjusted EBITDA between $1 billion and $1.1 billion.

Rite Aid shares fell 12 cents, or 4.4%, to $2.62 in recent trading. Among the company's competitors,

CVS Caremark

(CVS) - Get Report

was tracking up 0.9% at $40.95, while

Walgreen

(WAG)

was down 0.7% at $36.65.

This article was written by a staff member of TheStreet.com.