Rite Aid boosts guidance after healthy Q3
Rite Aid is raising its guidance for 2015 after a big jump in same store sales lifted the company in the third quarter.
The company reported third-quarter revenues of $6.7 billion, an increase of 5.3%, driven primarily by same-store sales. Same-store sales for the quarter ended Nov. 29 were up 5.4% overall, including a 1.6% lift in front-end same store sales and a 7.2% increase in pharmacy same store sales.
"We are pleased with our results for the third quarter," said Rite Aid chairman and CEO John Standley. "Our focus on expanding our health-and-wellness offering and delivering a higher level of care to the communities we serve drove our strong same-store sales, prescription count and gross profit. Based upon our strong third-quarter results, we have raised our guidance for the year."
A big driver behind Rite Aid's results is its Wellness format, which now numbers 1,529 stores, representing 33.4% of the chain's store base. And it's only getting better as the chain continues to commit to its Wellness format; Rite Aid is expected to spend $525 million in capital expenditures by the end of the year.
"We believe Wellness remodels are likely a modest help to the comp and could provide further support over time as a higher proportion of the store base is remodeled," said Ed Kelly, Credit Suisse research analyst. "We continue to rate Rite Aid Outperform and expect much better performance from the company in fiscal 2016."
Based upon third-quarter results, the company is raising its guidance.Adjusted EBITDA is expected to be between $1.3 billion and $1.3 billion. Net income is expected to be between $315 million and $370 million and income per diluted share between 31 and 37 cents. Sales are expected to be between $26.3 billion and $26.4 billion and same-store sales to range from an increase of 3.8% to an increase of 4.3% over fiscal 2014.
In the third quarter, the company relocated three stores, remodeled 103 stores and expanded one store, bringing the total number of Wellness stores chainwide to 1,529. The company also acquired six stores and closed six stores, resulting in a total store count of 4,572 at the end of the third quarter.