Rite Aid Corp
The results marked the No. 3 U.S. drugstore chain's 11th straight quarterly loss, one which the company attributed to a mild cold and flu season that cut down on sales of medications.
Rite Aid has performed worse than larger rivals like Walgreen
We think part of Rite Aid's consumer base has lagged in terms of economic recovery relative to some of Rite Aid's peers, said Leah Hartman, an analyst with CRT Capital Group.
Rite Aid posted a loss of $208.4 million, or 24 cents per shares, for the fourth quarter ended February 27, compared with a loss of $2.29 billion, or $2.67 per share, a year earlier.
Analysts on average had forecast a loss of 19 cents a share, according to Thomson Reuters I/B/E/S.
Sales fell 3.6 percent to $6.46 billion. Sales at stores open at least a year fell 2.4 percent, the company said in early March.
Same-store sales of general merchandise dropped 2.6 percent. Rite Aid has had to compete with supermarkets and discount retailers in this area.
The new fiscal year showed some moderation in that decline, with same-store sales falling by 0.1 percent in March. Rite Aid forecast same-store sales would range from a decline of 1 percent to an increase of 1 percent in its fiscal 2011.
The drugstore chain said it expects the economy to remain weak, with high unemployment, and forecast a fiscal 2011 loss per share of 41 cents to 65 cents. Analysts expect a loss of 36 cents.
Rite Aid shares were down 12 cents at $1.57 in midday trading on the New York Stock Exchange.
FEWER PRESCRIPTIONS FILLED
Rite Aid said prescriptions filled at stores open at least a year fell by 1.7 percent in the fourth quarter, a key indicator as prescription sales make up two-thirds of total drugstore sales.
The profit margin in its pharmacy business fell 1.42 percentage points during the quarter, primarily due to a lack of new generic drugs and lower gross profits on the new generic drugs it did sell. Lower reimbursement rates on brand-name as well as generic drugs also hit margins.
It was a difficult quarter with continued weak consumer demand, a weaker cough, cold and flu season than last year, and continued pressure on pharmacy reimbursement, Chief Executive Mary Sammons said in a statement.
Sammons is stepping down as CEO in June but staying on as chairman. She will be succeeded by current President and Chief Operating Officer John Standley.
The struggling chain closed 138 stores and opened 17 new stores during the fiscal year, bringing its total store count to 4,780. Chief Financial Officer Frank Vitrano said on a call with analysts that there could be as many as 80 additional store closings this year.
Rite Aid has also had a hard time boosting sales at the Brooks and Eckerd stores it bought from Canada's Jean Coutu
Rite Aid has refinanced debt, trimmed expenses and taken other steps to improve its position, but the acquisition has limited its ability to compete and led to extra expenses linked to the closing of stores.
You can see that in the kinds of margins Rite Aid has and can see that in the fact they are still closing down stores -- it's a drag, said Doug Conn, a managing director at Hexagon Securities.
(Reporting by Phil Wahba; additional reporting by Jessica Wohl; Editing by Lisa Von Ahn, Dave Zimmerman and John Wallace)