Rite Aid Reports Second Fiscal Quarter Results
Rite Aid finished its second fiscal quarter with continued strong liquidity and remains in good position to execute its business plan. Better labor controls, lower costs in the stores on supplies, insurance and utilities, and lower corporate expenses helped narrow the loss from a year ago and held adjusted EBITDA of $ 216.5 million very close to last year’s number.
Rite Aid’s prescription count growth initiatives again delivered good results. Pharmacies filled 1.4% more prescriptions in the second quarter compared to the same quarter the previous year with pharmacy same store sales increasing 0.8 percent. The company also had its highest generic dispense rate ever at 70.4%.
The weak economy and the resulting high unemployment continued to impact sales. Front end same store sales in the second quarter decreased 4.9 percent over the prior year, soft in most categories and negatively impacted by a value-driven customer buying more items on sale than they have in the past. On the positive side, these value-driven customers helped drive sales of Rite Aid Brand products to 15.2 percent of front end sales, an increase of 1.2 percent over last year. Unfortunately, the higher margin from Rite Aid brand products wasn’t enough to make up for the sales shortfall and more items sold on promotion.
The company expects a tough economy, high unemployment, a shopper driven by discounts and challenging pharmacy margins to continue to have a negative impact in the remainder of the fiscal year. As a result, it’s lowered the fiscal 2010 forecast for sales, net loss and adjusted EBITDA. Adjusted EBITDA is now expected to be in the range of $900 million to $1 billion.