BANGALORE (Reuters) - Rite Aid Corp <RAD.N>, the third-largest U.S. drugstore chain, posted a fourth-quarter loss due to a big tax charge and merger-related costs, and forecast weak 2009 results, sending its shares down as much as 8 percent.
By Varsha Tickoo
BANGALORE (Reuters) - Rite Aid Corp <RAD.N>, the third-largest U.S. drugstore chain, posted a fourth-quarter loss due to a big tax charge and merger-related costs, and forecast weak 2009 results, sending its shares down as much as 8 percent.
Excluding the charge and other items, loss for the quarter was narrower than the market estimate -- a respite for Rite Aid that has lately been plagued by weak holiday and slow flu seasons, and cheap generic drugs cutting into sales.
For 2009, Camp Hill, Pennsylvania-based Rite Aid forecast a net loss that was more than double the market estimate, citing slower prescription growth and pharmacy reimbursement rate pressures, amid a challenging economic environment.
!ADVERTISEMENT!Rite Aid stores fill prescriptions, which account for nearly two-thirds of sales, and sell health and beauty aids, convenience foods, greeting cards, among other items.
The retailer posted a net loss of $952.2 million, or $1.20 a share, compared with a profit of $15.1 million, or a penny a share, a year earlier.
The latest quarter's loss includes $1.12 a share related to an income tax charge, and other expenses connected to its acquisition of the Brooks and Eckerd drugstore chains from Canada's Jean Coutu Group (PJC) Inc <PJCa.TO> last year.
Excluding items, Rite Aid would have posted a loss of 6 cents a share for the latest quarter, it said in the call.
Revenue rose 51 percent to $6.82 billion, while same-store sales rose 1.3 percent -- consisting of a 1.4 percent pharmacy same store sales increase and a 1 percent rise in front-end same store sales.
Analysts on average expected a loss of 8 cents a share, before special items, on revenue of $6.89 billion, according to Reuters Estimates.
"The quarter started off slowly but we finished with solid same-store sales increases in both pharmacy and front end in January and February," company CEO Mary Sammons said in a conference call with analysts.
The number of prescriptions increased, but pharmacy same-store sales were hit by the introduction of new generics, the company said.
Same-store sales this quarter do not include the Brooks Eckerd stores, where front-end sales were negative during the quarter.
The company bought the Brooks and Eckerd drugstore chains from Canada's Jean Coutu Group Inc <PJCa.TO> in 2007 for about $4 billion to compete better with larger rivals Walgreen Co <WAG.N> and CVS Caremark <CVS.N>.
DISMAL OUTLOOK
The company forecast a net loss of 34 cents to 48 cents a share for 2009, on sales of $26.7 billion to $27.2 billion.
Analysts were expecting a loss of 15 cents a share, on revenue of $27.27 billion.
"As we've said in the past, we are recession resistant, but not recession-proof," another company official said on the company's conference call.
Shares of Rite Aid, which operates more than 5,000 stores, were trading down 14 cents to $2.60 on the New York Stock Exchange.
(Additional reporting by Dhanya Skariachan in Bangalore; Editing by Amitha Rajan)
