Positive Same-Store Sales Haven't Saved Rite Aid (RAD)

NEW YORK (TheStreet) -- Rite Aid (RAD) stumbled on Thursday despite reporting positive same-store sales growth. In what is proving a trend for retailer, investors sold off shares in the convenience store chain, pushing Rite Aid 3.8% lower to $5.78.

November same-store sales for the retail sector were released on Thursday and Rite Aid managed a 2.8% increase, boosted by strength in its pharmacy. Front-end same-store sales gained 0.4%, while pharmacy sales were up 3.9%, shrugging off the negative impact of new generic introductions. Prescription count at comparable stores was up 0.1%.

However, a positive increase was off of a low base as the stores were afflicted by the effects of Superstorm Sandy during the same month a year earlier. The drugstore noted the comparison to the month following Sandy boosted front-end same-store sales by 0.4% and prescription count growth by 1.6%.

The Pennsylvania-based business said same-store sales over the quarter ended Nov. 30 and year to date had increased 2.3% and 0.3%, respectively.

Rite Aid is slated to report third-quarter earnings in two weeks. Year to date, the stock has surged 323.5%.

TheStreet Ratings team rates Rite Aid Corp as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate  (RAD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

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