Rite Aid Corporation
), the third-largest retail drugstore in the U.S. based on revenues
and number of stores, is scheduled to report its first-quarter 2013
financial results on Thursday, June 21, 2012. The Zacks Consensus
Estimate projects a loss of 4 cents per share for the first quarter
with projected revenues of $6,467 million.
With respect to earnings surprises, Rite Aid has a history of
missing as well as topping the Zacks Consensus Estimate in the
trailing four quarters. The company's surprise history ranges from
negative 41.7% to positive 50.0%, with an average surprise of
positive 22.9%. Of the trailing four quarters, Rite Aid has
surpassed the Zacks Consensus Estimate in the earlier three
quarters, while missing in the recently passed quarter.
Looking Back at Fourth-Quarter 2012
The drugstore chain operator posted an adjusted loss per share
of 4 cents, which not only improved from the prior-year loss of 24
cents, but also outpaced the Zacks Consensus Estimate loss of 12
cents a share. Growth in same-store sales and reduced selling,
general & administrative (SG&A) expenses had a positive
influence on recent results.
Rite Aid's revenues came in at $7,146.8 million for the quarter
compared with $6,456.5 million in the prior-year period. An
increase of approximately 10.7% was mostly attributable to growth
in same-store sales and an additional week in the quarter,
partially offset by store closings. Same-store sales for the
quarter increased 3%. Moreover, total revenue edged past the Zacks
Consensus Estimate of $7,100 million.
Fiscal 2013 Outlook
Rite Aid expects fiscal 2013 revenues to be between $25.4
billion and $25.8 billion based on same-store sales increase of
flat to 1.5%. Currently, net loss is expected to be in the range of
$103 million to $267 million (or 13 cents to 31 cents per
First Quarter Sales Results So Far
Thus far in the first quarter of fiscal 2013, Rite Aid has
posted robust monthly sales results. The company's same-store sales
(comps) for the one month ended April 28, 2012, rose 2.9%, based on
strong front-end, pharmacy and prescription count comps for the
month. Total drugstore sales in April were $1.993 billion,
representing a 2.5% rise from the year-ago level of $1.945
For the five-week period ended June 2, 2012, the company's comps
increased 1.1%, while total drug store sales grew 0.3% to $2.454
billion, up from the year-ago level of $2.446 billion.
Agreement of Estimates
Despite positive sales results so far in the first quarter, 2
out of 5 analysts, increased their loss forecast, while none moved
their estimates in the positive territory in the last 30 days. For
full fiscal 2013, 1 analyst downwardly revised estimates, while
none of the analysts revised in the opposite direction over the
last 30 days.
Magnitude of Estimate Revisions
Negative earnings revisions by analysts in the last 30 days
increased the Zacks Consensus Estimate of a loss by a penny each
for the first-quarter and fiscal 2013 to 4 cents and 20 cents per
Of late, Rite Aid has also been focusing on improving
store-level performance, as part of its turnaround strategy. Apart
from initiating programs like the Wellness+ program for diabetes
and the Flu Immunization program, the company is implementing
various cost-cutting initiatives to improve its near-term as well
as long-term profitability.
Rite Aid is working toward expanding its generic drug portfolio
in order to boost its top line as well as market share. Generally,
generic (non-brand) drugs are less expensive but generate higher
gross margin. Rite Aid's positioning as the third largest
retail drugstore in the U.S. -- based on revenues and number of
stores -- provides it an edge over its competitors to accomplish
However, the company's peer
) foray into the retail generic drug market is exerting pressure on
Rite Aid's pharmacy margin. Moreover, an increased debt burden
resulting from the acquisition of Brooks Eckerd has limited the
scope of additional finance.
Rite Aid currently holds a Zacks #3 Rank, implying a short-term
Hold rating on the stock. The company retains a long-term Neutral
recommendation on the stock.
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