Rite Aid Corp. reported mixed third-quarter results and said it has implemented a store closure program to reduce costs and drive profitability.
As the first phase of the program, which began this past November, the company is closing 63 stores. The closures are expected to provide an annual EBITDA benefit of $25 million.
Rite Aid said it will continue to review stores expects additional closures during the next several months. At the end of the third quarter, the company operated 2,400 locations nationwide.
Rite Aid president and CEO Heyward Donigan said the store closure program would also ensure that the company has a “healthy foundation to grow from, with the right stores in the right locations, for the communities we serve and for our business.”
In November, CVS Health said it plans to close approximately 900 stores during the next three years. Both CVS and Walgreens have been focusing on expanded healthcare services.
Rite Aid’s net loss totaled $36.1 million, or $0.67 per share, for the quarter ended Nov. 27, compared to net income of $4.3 million, or $0.8 cents per share in the year-ago period. Adjusted earnings per share of $0.15 beat analyst estimates for a loss of $0.18.
Revenue rose 1.8% to $6.23 billion, missing estimates of $6.320 billion. The increase was driven by growth at the retail pharmacy segment, which was partially offset by a decline at the pharmacy services segment, the company said.
Same-store sales rose 4.4%, with a 5.9% increase in pharmacy sales and a 0.4% increase in front-end sales. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 7.9% over the prior-year period. In addition to the benefit from 4 million COVID-19 vaccinations, maintenance prescriptions increased 1.7% while other acute prescriptions increased 3.9% on a same-store basis when excluding COVID-19, flu and all other ancillary vaccinations
"Despite challenges in the labor market, our pharmacists and store teams were able to meet the unprecedented volumes for COVID and flu immunizations, COVID testing and other clinical services," said Donigan.“We are encouraged by our recent momentum and expect to deliver a significant increase in our fourth quarter Adjusted EBITDA results compared to last year.”
For fiscal 2022, Rite Aid is guiding for revenue between $24.4 billion and $24.7 billion and an adjusted loss per share between $0.4 and $0.49.