Rite Aid 2Q growth offset by Brooks Eckerd weakness

CAMP HILL, Pa. Rite Aid reported revenues of $6.5 billion and a net loss of $222 million or 27 cents per diluted share for its fiscal second quarter ended Aug. 30, 2008. Solid front-end and pharmacy sales in core Rite Aid stores were offset by the expected decrease in sales at acquired Brooks Eckerd stores.

“In this tough retail environment, our core stores delivered solid performance, we made significant progress building our acquired stores’ front-end sales, we took steps to increase our financial flexibility and we largely completed the integration of Brooks Eckerd. We also improved our gross profit rate in spite of what has turned out to be a heavily promotional environment in pharmacy as well as front end,” said Mary Sammons, Rite Aid chairman, president and ceo.

Same-store sales for the quarter increased 0.6% over the prior year 13-week period, consisting of a 1.9% increase in the front end and flat same-store sales in the pharmacy.

Excluding the acquired Brooks Eckerd stores, same-stores sales for the 13-week second quarter increased 3.1% over the prior-year period with front end increasing 3.6% and pharmacy growing 2.8%.

At the Brooks Eckerd stores, same store sales for the 13-week second quarter decreased 4.1% over the prior-year period, an improvement over the first quarter’s decrease of 7.2%.

Based on current sales trends, a longer-than-expected turnaround of Brooks Eckerd pharmacy sales, economists’ forecasts for continued weakness in the economy, the closing of underperforming stores and the company’s planned cost reductions for the remainder of its fiscal year, Rite Aid has revised its fiscal 2009 guidance.

Sales are expected to be between $26 billion and $26.5 billion in fiscal 2009 with same-store sales expected to improve 1.5% to 3% over fiscal 2008. Net loss for fiscal 2009 is expected to be between $445 million and $535 million or a loss per diluted share of 56 cents to 67 cents.