Rite Aid reports net loss of $63.1 million for first quarter ended May 28, 2011

Rite Aid Corporation (NYSE: RAD) today reported financial results for the first quarter ended May 28, 2011.

The company reported revenues of $6.4 billion, a net loss of $63.1 million or $0.07 per diluted share and Adjusted EBITDA of $262.9 million or 4.1 percent of revenues. Results benefited from continued growth in same store sales and a decrease in selling, general and administrative (SG&A) expenses partially offset by a decline in gross margin.

"We are pleased with the continued improvement in our results. We increased Adjusted EBITDA as we again grew same store sales and further reduced operating costs," said John Standley, Rite Aid president and CEO. "Our sales initiatives continued to gain traction with the number of members enrolled in our wellness+ customer loyalty program reaching nearly 40 million. Prescriptions filled in comparable stores increased as customers took advantage of our new pharmacy programs.

"We're also excited about the new wellness store format we piloted during the quarter," Standley said. "These totally revamped stores offer expanded clinical services, hundreds of new products that support health and wellness and our unique on-site Wellness Ambassadors. Even in these early stages, the customer response has been extremely positive."

First Quarter Summary

Revenues for the 13-week quarter were $6.4 billion, flat to $6.4 billion in last year's first quarter. Revenues were positively impacted by an increase in same store sales, which were offset by store closings.

Same store sales for the quarter increased 0.8 percent over the prior-year period. Front-end same store sales were flat compared to the prior-year period while pharmacy same store sales increased 1.1 percent. Pharmacy sales included an approximate 145 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 0.4 percent over the prior year period. Prescription sales accounted for 68.7 percent of total drugstore sales, and third party prescription revenue was 96.5 percent of pharmacy sales.

Net loss was $63.1 million or $0.07 per diluted share compared to last year's first quarter net loss of $73.7 million or $0.09 per diluted share. Decreases in both SG&A and interest expense contributed to the decrease in net loss. This was partially offset by a decline in front-end margin, which was driven by investments in Rite Aid's wellness+ customer loyalty program, and a loss on debt modification related to the refinancing of the company's $343 million Tranche 3 term loan in March 2011. The Tranche 3 term loan was replaced with a new $343 million Tranche 5 term loan that has an extended maturity and lower interest expense.

Adjusted EBITDA (which is reconciled to net loss on the attached table) was $262.9 million or 4.1 percent of revenues for the first quarter compared to $249.8 million or 3.9 percent of revenues for the like period last year.

In the first quarter, the company relocated 6 stores, remodeled 3 stores and closed 10 stores. Stores in operation at the end of the first quarter totaled 4,704.

Rite Aid Confirms Fiscal 2012 Guidance

Rite Aid confirmed fiscal 2012 guidance with sales expected to be between $25.7 billion and $26.1 billion, same store sales to range from an increase of 0.5 percent to an increase of 2.0 percent over fiscal 2011 and Adjusted EBITDA (which is reconciled to net loss on the attached table) to be between $800 million and $900 million. Net loss is expected to be between $370 million and $560 million or a loss per diluted share of $0.42 to $0.64. Capital expenditures are expected to be approximately $300 million.