Retail drugstore chain operator Rite Aid Corp. (RAD) Thursday morning reported a wider year-over-year loss of $2.3 billion for the fourth quarter, hurt by impairment charges and deferred tax asset write downs. The quarter's loss per share was three cents wider than analysts' expectations. The company also provided earnings and revenue outlook for fiscal 2010, forecast in line with estimates.

In a statement, Chairman and Chief Executive Officer, Mary Sammons said, Despite continued weakness in the economy, we were able to improve our business significantly in the second half of the year as we completed the integration of Brooks Eckerd, enhanced our management team and focused on strengthening our financial position. We made good progress operating our stores more efficiently, taking costs out of the business and reducing working capital, especially in the fourth quarter.

Fourth-Quarter Results

The Camp Hill, Pennsylvania-based company reported loss attributable to common stockholders of $2.30 billion or $2.67 per share for the fourth quarter, sharply wider than $960.44 million or $1.20 per share in the prior-year quarter.

The results for the quarter include significant non-cash charges resulting from goodwill impairment, store impairment and deferred tax asset write-down that totaled $2.2 billion or $2.53 per share. Goodwill impairment charge accounted for $1.81 billion or $2.10 per share, of which about $1.2 billion is related to the July 2007 Brooks Eckerd acquisition.

Excluding the non-cash charges, net loss for the fourth quarter was $116.9 million or $0.14 per share. On average, seven analysts polled by Thomson Reuters expected the company to report a loss of $0.11 per share in the fourth quarter.

Revenues for the quarter marginally declined 1.7% to $6.71 billion from $6.82 billion in the same quarter last year, and narrowly missed seven Wall Street analysts' consensus estimate of $6.73 billion. The decline in sales was attributable to 158 fewer stores this quarter compared to last year.

Among Rite Aid's peers, Deerfield, Illinois-based Walgreen Co. (WAG) last week reported a decline in second quarter profit, on charges related to Rewiring for Growth restructuring program, despite a nearly 7% rise in sales. Quarterly comparable store sales grew 1.3%. Net income dropped to $640 million or $0.65 per share from $686 million or $0.69 per share in the year-ago quarter. Net sales for the quarter advanced 7% to $16.5 billion from $15.4 billion last year.

Another peer, Rhode Island-based CVS Caremark Corp. (CVS) is scheduled to announce fiscal 2009 first quarter results on May 5. Analysts currently expect the company to report earnings of $0.54 per share, while revenue for the quarter is estimated to be $23.71 billion.

Quarterly Same-Store Sales

Rite Aid's quarterly same store sales decreased 0.1%, comprising pharmacy same store sales increase of 0.8% and a 2.0% decrease in front-end same store sales.

Excluding Brooks Eckerd stores, same store sales for the fourth quarter increased 0.8%, with same store sales in pharmacy increasing 2.4% and front-end same store sales declining 1.9%. Same store sales declined 1.9% at Brooks Eckerd stores, with same store sales in pharmacy decreasing 1.9% and front-end same store sales declining 2.1%.

Pharmacy same store sales included about 301 basis points negative impact from new generic introductions. The number of prescriptions filled declined 0.9%, negatively impacted by performance at acquired stores. Prescription sales contribution was 66.6% of total sales, and third party prescription sales represented 96.3% of pharmacy sales.

March Sales

Total drugstore sales for the month of March declined 2.3% to $1.996 billion from $2.044 billion in the year-ago period. Prescription revenue accounted for 69.3% of drugstore sales, and third party prescription revenue represented 96.4% of pharmacy sales.

March Same-Store Sales

Rite Aid's March same store sales were down 0.7%, due to the negative impact of Easter falling in April this year compared to March last year. Front-end same store sales declined 6.3%, while pharmacy same-store sales, which included about 367 basis points negative impact from new generic introductions, grew 2.0%.

Excluding the acquired Brooks Eckerd stores, March same-store sales increased 0.2%, with a 6.0% decrease in front-end same store sales and a 3.7% increase in pharmacy same-store sales.

Same store sales at the acquired Brooks Eckerd stores declined 2.5%, with front-end same store sales decreasing 7.3% and pharmacy same store sales declining 0.9%.

Other Metrics

During the quarter, the company's adjusted EBITDA came in at $261.38 million or 3.90% of revenues, lower than $276.26 million or 4.05% of revenues, in the year-ago quarter.

Total costs and expenses for the fourth quarter was $8.71 billion, up from $6.88 billion in the year-ago quarter. Expenses included, lease termination and impairment charges of $104.02 million, compared to $43.71 million in the prior-year quarter and a goodwill impairment charge of $1.81 billion incurred in the current quarter, compared to none in the year-ago quarter.

Gross profit for the fourth quarter was $1.72 billion or 25.70% of revenues, compared to $1.89 billion or 27.67% of revenues, in the year-ago quarter.

The company ended the fourth quarter with cash and cash equivalents of $152.04 million, compared to $155.76 million at end of the prior-year quarter.

During the fourth quarter, Rite Aid opened 6 stores, relocated 10 stores, and closed 19 stores. At the end of the quarter, the company operated 4,901 stores in 31 states and the District of Columbia.

Separately, Rite Aid said it would close its distribution center in Newnan, Georgia in late September, as part of its initiative to improve operational efficiency. The 297 associates employed at the facility and local and state officials are being notified of the closing pursuant to the federal Worker Adjustment and Retraining Notification Act. All associates will receive severance and outplacement services.

Full-Year Highlights

For fiscal 2009, Rite Aid reported a loss attributable to common stockholders of $2.94 billion or $3.49 per share, sharply wider than $1.11 billion or $1.54 per share posted in fiscal 2008.

Excluding non-cash charges, net loss for the year was $640 million or $0.79 per share. Analysts expected the company to report a loss of $0.88 per share for the full-year 2009.

Revenues for the full-year increased 8.1% to $26.29 billion from $24.33 billion in the previous year. The Street was looking for full-year 2009 revenues of 26.32 billion.

Outlook

For fiscal 2010, the company anticipates net loss in a range of $210 million to $435 million or a loss per share of between $0.26 and $0.53. Analysts currently expect the company to report a loss of $0.36 per share for the full-year 2010.

The company also said that given the uncertainty of the retail environment, it expects fiscal 2010 sales to be between $26.3 billion and $26.7 billion, with same store sales improving 0.5% to 2.5% over fiscal 2009. The Street is looking for full-year 2010 revenues of 26.65 billion.

Adjusted EBITDA is currently expected between $1.025 billion and $1.125 billion. Capital expenditures for fiscal year 2010 are expected to be about $250 million.

The company noted that it would continue to focus on growing profitable sales, reduce operating expenses through additional efficiencies, improve working capital, and reduce capital expenditures.

Stock Quote

In Thursday's regular trading session, RAD is trading at $0.44, up $0.05 or 12.85%, on a volume of 8.42 million shares. In the past 52-week period, the stock has been trading in a range of $0.20 to $3.03.

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