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Retail

Rite Aid same-store sales miss estimates hurt by new generic drugs

A Rite Aid sign is seen outside one of their stores in New York, April 11, 2013. REUTERS/Shannon Stapleton

(Reuters) - Rite Aid Corp, which has agreed to be bought by larger rival Walgreens Boots Alliance Inc, reported same-store sales below analysts estimates hurt by the introduction of more low-margin generic drugs.

The No.3 U.S. drugstore operator’s pharmacy same-store sales grew only 1.2 percent, missing the 2.1 percent growth expected by analysts polled by research firm Consensus Metrix.

The company’s net income fell 43 percent to $59.5 million, or 6 cents per share, in the third quarter ended Nov. 28.

Profit was hurt by expenses related to EnvisionRx, the pharmacy benefit manager which Rite Aid bought for about $2 billion in June, and lower income tax expense in the year earlier period.

Revenue rose about 22 percent to $8.15 billion.

Analysts on average had expected earnings of 6 cents per share on revenue of $8.18 billion, according to Thomson Reuters I/B/E/S.

Walgreens agreed in October to buy Rite Aid for $9.4 billion to widen its footprint in the United States and negotiate for lower drug costs.

Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta

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