Rite Aid Corporation (NYSE: RAD) today reported financial results for the first quarter ended May 29, 2010.
“We increased adjusted EBITDA as a percent of sales while at the same time improved customer satisfaction ratings on both the front end and in the pharmacy. Our liquidity position remained strong, which is critically important if the economy continues to be slow to recover.”
The company reported revenues of $6.4 billion, a net loss of $73.7 million or $0.09 per diluted share and adjusted EBITDA of $249.8 million or 3.9 percent of revenues. Results benefited from a decrease in selling, general and administrative (SG&A) expenses as a percent of sales, partially offset by a decline in sales and gross margin.
"We accomplished a lot in the first quarter. Our team continued to improve operational efficiency to help offset the challenging economic and competitive environment impacting sales and margin," said Mary Sammons, Rite Aid Chairman and CEO. "We increased adjusted EBITDA as a percent of sales while at the same time improved customer satisfaction ratings on both the front end and in the pharmacy. Our liquidity position remained strong, which is critically important if the economy continues to be slow to recover."
"During the quarter, we made excellent progress on our initiatives. We nationally launched our new wellness + customer loyalty program, began immunization training that will more than triple the number of Rite Aid pharmacists able to provide vaccinations and introduced the first products in our revamped private brand program into the stores," said John Standley, Rite Aid President and Chief Operating Officer. "We expect these sales initiatives, along with the continued roll-out of our segmentation strategy, to have a significant positive impact on our business long term."
As previously announced, Standley will become Rite Aid President and CEO following the company's annual stockholder meeting today. Sammons will remain Chairman of the Board until the company's annual meeting in June 2012.
First Quarter Summary
Revenues for the 13-week quarter were $6.4 billion versus revenues of $6.5 billion in the prior year first quarter. Revenues decreased 2.1 percent as a result of store closings and a decline in same store sales.
Same store sales for the quarter decreased 1.0 percent over the prior year 13-week period, consisting of a 1.3 percent decrease in the front end and a 0.9 percent decrease in the pharmacy. Pharmacy sales included an approximate 138 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores decreased 1.7 percent over the prior year period. Prescription sales accounted for 68.3 percent of total drugstore sales, and third party prescription revenue was 96.3 percent of pharmacy sales.
Net loss was $73.7 million or $0.09 per diluted share compared to last year's first quarter net loss of $98.4 million or $0.11 per diluted share. A decrease in SG&A expense and lower charges related to store closings contributed to the decrease in net loss.
Adjusted EBITDA (which is reconciled to net loss on the attached table) was $249.8 million or 3.9 percent of revenues for the first quarter compared to $249.2 million or 3.8 percent of revenues for the like period last year.
In the first quarter, the company opened 2 new stores, relocated 8 stores, remodeled 1 store and closed 15 stores. Stores in operation at the end of the first quarter totaled 4,767.
Rite Aid Confirms Fiscal 2011 Guidance
Rite Aid confirmed fiscal 2011 guidance, with sales expected to be between $25.2 billion and $25.6 billion, same store sales to range from a decrease of 1.0 percent to an increase of 1.0 percent over fiscal 2010 and Adjusted EBITDA (which is reconciled to net loss on the attached table) to be between $875 million and $975 million. Net loss is expected to be between $355 million and $570 million or a loss per diluted share of $0.41 to $0.65. Capital expenditures are expected to be approximately $250 million.
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