Monday, April 4, 2011

Rite Aid Corp. (NYSE: RAD): Q4 Earnings Preview 2011

Rite Aid Corp. (NYSE: RAD)

Rite Aid Corp. (NYSE: RAD), the third-largest drugstore chain, is scheduled to release fourth quarter earnings before the opening bell on Thursday, April 7, 2011. Analysts, on average, expect the company to report a loss of $0.24 per share on revenue of $6.38 billion. In the year ago quarter, the company posted a loss of $0.24 per share on revenue of $6.46 billion.

Rite Aid Corporation, through its subsidiaries, operates retail drugstores. Its drugstores primarily provide pharmacy services. The company sells prescription drugs and front-end products. The drug retailer has lost money in each quarter since its June 2007 acquisition of Brooks & Eckerd as it is still struggling with integration issues. As of March 26, 2011, the company operated 4,711 stores compared to 4,777 stores a year ago. 

In the preceding third quarter, the Camp Hill, Pennsylvania-based company's net loss was 79.07 million or $0.09 per share, compared to a loss of $83.86 million or $0.10 per share in the prior-year quarter. Revenue dropped 2.4% to $6.20 billion from $6.35 billion in the same quarter last year. Analysts, on average, expected the company to post a loss of $0.13 per share on revenue of $6.20 billion. 

At its last earnings call in December, the company lowered its fiscal 2011 financial guidance. Rite Aid now expects net loss in a range of $525 million-$655 million or $0.60-$0.74 per share. Earlier, the company projected net loss in a range of $400 million-$590 million or $0.46-$0.67 per share. The company also reduced the higher end of its revenue forecast range for the year. The company now expects revenue for the full year in a range of $25.0 billion-$25.2 billion, compared to the prior range of $25.0 billion-$25.4 billion. te Aid now projects same store sales for fiscal 2011 to range from a decrease of 1.5%-0.9%. Earlier, the company forecast same store sales to range from a decrease of 1.5% to being flat. The company also lowered its outlook for capital expenditure for the year to $215 million from the prior forecast of $250 million.

Early in March, the company said that its fourth-quarter same store sales increased 0.9 percent over the prior-year period. Front-end same store sales increased 1.0 percent over the prior-year while pharmacy same store sales increased 0.8 percent. Prescriptions filled at comparable stores increased 0.8 percent over the prior-year period. Total drugstore sales for the 13-week fourth quarter decreased 0.1 percent to $6.432 billion compared to $6.438 billion in last year's like period. Prescription revenue represented 66.7 percent of total drugstore sales, and third party prescription revenue was 96.3 percent of pharmacy sales.

Rite Aid operates in a highly fragmented specialty retail sector. The company has been closing stores and cutting debt in response to poor corporate performance, but these moves haven't proved fruitful so far. Rite Aid's trouble has been compounded by intense competition from its larger rivals, Walgreen (NYSE: WAG) and CVS (NYSE: CVS), as they continue to add stores to their chains. Moreover, Wal-Mart's foray into the retail generic drug market is putting pressure on Rite Aid's pharmacy margin. Also, an increased debt burden and interest expenses due to the acquisition of Brooks Eckerd has limited the scope of additional finance..  

Rite-Aid continues to pay off debt and struggles to progress sales. In March, Rite Aid successfully refinanced the approximately $343 million Tranche 3 Term Loan due June 2014 under its senior secured credit facility with the proceeds of a new $343 million Tranche 5 Term Loan due March 2018 under its senior secured credit facility.

Last month, Rite Aid announced that it successfully regained compliance with the New York Stock Exchange. The New York Stock Exchange's rules require that a company's stock must trade at a minimum average closing price of more than a $1 over a consecutive 30-day trading period.

In terms of stock performance, Rite Aid shares have lost nearly 29% over the past year.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire