Boston, MA 12/20/2013 (wallstreetpr) – Shares of major drugstore operator Rite Aid Corporation (NYSE:RAD) fell by more than 10% yesterday to close at $5.17. This was due to the weak guidance issued by the company for the fiscal 2013.
Quarterly Results:
The company declared above expectation results for the quarter ending November 30, 2013. Revenues at Rite Aid Corporation (NYSE:RAD) increased by 1.9% to $6.36 billion against analysts expectation of $6.32 billion. Same-store sales grew by 2.3%, with comparable-store prescription count increasing by 0.7%. There was a decrease of 0.2% in the front of the store and 3.5% in pharmacy. However, the company’s focus on wellness-focused store format and the encouraging response to flu-immunization program improved the results. Rite Aid benefitted from the dispute between Walgreen Co. and Express Scripts Holding Co. in the same quarter last year, the dispute has since been resolved.
Rite Aid Corporation (NYSE:RAD) reported earning of $71.5 million as compared to $61.9 million for the same period last year translating to a decrease in EPS to $0.04 against $0.07 reported for the same period last year. This was on account of a negative impact of $0.03 per share on account of redemption of preferred stock. Analysts were expecting earnings to be $0.04 per share.
Rite Aid cuts full fiscal guidance
Rite Aid Corporation (NYSE:RAD) cut its full fiscal earnings estimate to $0.17 to $0.23 per share from the earlier estimates of $0.18 to $0.27 per share. Revenue estimate was revised upwards from $25.1 billion to $25.3 billion to $25.3 billion to $25.425 billion. Rite Aid also has upped its capital spending by $15 million to $415 million. The company is targeting same-store sales growth of 0.35% to 0.85%.
Rite Aid Corporation (NYSE:RAD) has been facing a decline in earnings following the onslaught of generic drugs in the market. Though generic drugs offer a better margin, their lower prices means lower overall profits. The lower prices do manage to stimulate sales. This issue is of concern to all the pharmacy chains. Rite Aid has benefited from its loyalty programs as well as expanded clinical-pharmacy services and health and wellness products.
