Rite Aid returns to profit, raises forecast
(Reuters) - Rite Aid Corp (RAD.N) reported its first quarterly profit in more than five years on Thursday, helped by growth in the number of prescriptions filled and higher comparable sales of general merchandise at its stores.
Shares of the third-largest U.S. drugstore chain were up 13.5 percent at $1.18 after rising higher in premarket trading.
Rite Aid also raised its forecast for the year, moving away from calling for a loss to raising the possibility of turning an annual profit, even though sales may come in weaker than it previously anticipated.
Rite Aid reported net income of $60.5 million, or 7 cents a share, for the third quarter ended December 1, compared with a year-earlier loss of $54.5 million, or 6 cents a share.
Analysts on average expected a loss of 3 cents per share in the latest quarter, according to Thomson Reuters I/B/E/S.
Rite Aid's last profit was in the quarter ended in May 2007.
Since then, Rite Aid has been closing many stores and remodeling hundreds of others. It has also added features to its loyalty program to entice shoppers.
Third-quarter revenue fell nearly 1.2 percent to $6.24 billion, as the company has been closing some locations.
Sales also suffered from Superstorm Sandy, which forced it to close nearly 800 of its 4,600 stores for some time.
Rite Aid said it was able to reopen all but nine of those stores within a week after the storm and reopened the vast majority within 72 hours. Still, the storm did not have a material impact on results, Chief Financial Officer Frank Vitrano said during a conference call.
Sales at stores open at least a year fell 1.5 percent. Same-store sales of general merchandise increased by 1.1 percent, while same-store sales at the pharmacy counters declined 2.7 percent.
Rite Aid and competitor CVS Caremark Corp (CVS.N) got a sales boost when Walgreen Co (WAG.N), the largest U.S. drugstore chain, did not fill prescriptions for patients on Express Scripts Holding Co (ESRX.O) benefits plans for the first 8-1/2 months of the year.
Now, Rite Aid and CVS are working on retaining those customers, who may now be able to once again get their medications at Walgreens. At the same time, Walgreens is promoting its new loyalty plan as it tries to woo shoppers back.
Rite Aid said the number of prescriptions filled in existing stores had risen 3.6 percent, as it filled more prescriptions due to the now-resolved Walgreens/Express Scripts dispute.
Rite Aid has retained "the lion's share" of patients it gained during the dispute, Vitrano said.
Rite Aid raised its outlook for the fiscal year, which now ranges from a net loss of 5 cents to a profit of 3 cents per share. In September, it had forecast a loss of between 9 cents and 23 cents.
Rite Aid also said it expected fiscal 2013 sales of $25.15 billion to $25.3 billion, with same-store sales down 0.3 percent to 0.9 percent. In September, it had called for sales of $25.1 billion to $25.4 billion, with same-store sales down 1 percent to up 0.25 percent.
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