|Rite Aid records first annual profit since 2007||| Print ||
|Written by TOM MURPHY, AP Business Writer|
|Thursday, 11 April 2013 11:00|
Rite Aid has reported its second-straight quarterly profit and first annual gain in six years, as generic drugs, an increase in prescriptions and a drop in some expenses helped the nation's third largest drugstore chain.
The Camp Hill, Pa., company's stock jumped nearly 19 percent, or 34 cents, to reach a new 52-week high price of $2.13 in Thursday morning trading after results were announced.
Rite Aid Corp. said it earned $124.4 million, or 13 cents per share, in its fiscal fourth quarter, which ended March 2. That compares with a loss of $163.8 million, or 18 cents per share, in the previous year's quarter.
Revenue fell about 10 percent to $6.45 billion compared with last year's quarter, which had an additional week.
Analysts, on average, expected the company to break even on a per-share basis for the period, and take in $6.44 billion in revenue, according to FactSet.
An increase in generic drugs hurt revenue but helped profitability for Rite Aid, as it has with other drugstore chains for more than a year now.
Generic equivalents of popular brand-name drugs like the cholesterol fighter Lipitor hurt revenue because generics cost less than their brand-name counterparts. But they boost profitability, because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
Rite Aid said revenue from stores open at least a year decreased 2 percent, which a 0.3 percent increase in front-end sales offset b y a 3.1 percent drop in pharmacy revenue. The number of prescriptions filled at stores open at least a year climbed 3 percent in the quarter.
Revenue from stores open at least a year is considered a key indicator of a retailer's health, because it excludes volatility from stores that have recently opened or closed.
Rite Aid's cost of goods sold dropped nearly 18 percent in the quarter to about $4.41 billion, and selling, general and administrative expenses also fell.
Rite Aid runs more than 4,600 drugstores in 31 states and the District of Columbia. It trails only Walgreen Co. and CVS Caremark Corp in size.
Rite Aid has been working to clean up its performance by closing hundreds of under-performing stores in recent years and installing a new wellness format in others. These stores have more organic food and natural personal care products and employees who can help customers find vitamins and nutritional supplements.
The company has converted nearly 800 stores to this format and plans to do 400 in fiscal 2014.
The store closings came after Rite Aid took on billions of dollars in debt to purchase 1,835 Brooks Eckerd drugstores in June 2007. It then struggled to improve results from those stores.
For the full fiscal year, the company earned $107.5 million, or 12 cents per share, on $25.39 billion in revenue.
For fiscal 2014, it expects net income to range between 4 cents and 20 cents per share, on $24.9 billion to $25.3 billion in revenue.
Analysts expect, on average, earnings of 4 cents per share on $25.17 billion in revenue.
Copyright 2013 The Associated Press.
|Last Updated on Thursday, 11 April 2013 11:01|