NEW YORK Duane Reade announced on Tuesday that it narrowed its first quarter net loss as total sales rose 3.1 percent to $427.1 million as new chairman and chief executive John Lederer expressed optimism in Duane Reade’s potential.
Filling the top spot vacated by Rick Dreiling in late January, Lederer, from 2001 to 2006, served as president of the Canadian supermarket chain with more than 1,000 corporate and franchise stores under various operating banners. During his 30-year career at Loblaw and its subsidiary companies, Lederer has held a number of senior positions throughout the organization, including executive vice president responsible for merchandising, operations and profit performance of all Loblaw businesses in eastern Canada.
In a conference call with analysts to discuss its first quarter results, Lederer said he has spent his time absorbing and learning more about the company by visiting stores to talk with customers and employees.
He said the changes that have taken place within the Duane Reade under the direction of Dreiling are tangible and sustainable and there is a strong foundation on which to build.
That is not to say that challenges do not exist. Lederer told analysts that the business has and will continue to evolve and the shifts in management undoubtedly add some uncertainty. In addition, the company may face such headwinds as the macro economic conditions creating challenges for many retailers. However, he stressed that business will continue as usual so the stride will not be broken. Lederer said he wants the transition to be seamless and wants to maximize Duane Reade’s potential.
Looking ahead, the company will develop additional initiatives to elevate the brand and the business but Lederer did not discuss details.
Total sales rose 3.1 percent to $427.1 million from $414.4 million in the year-ago period. Same-store sales rose 4.5 percent, while front-end same-store sales rose 7 percent. Pharmacy same-store sales increased 1.5 percent.
Front-end sales, which benefited from the earlier timing of the East holiday by 0.5 percent, were driven by strong sales of food and beverage categories, OTC products, and health and beauty care items.
Net loss for the quarter totaled $21 million compared with $30.5 million in the prior year. The operating loss was $4.1 million compared with $14.9 million in the year-ago period.
For 2008, the company reaffirmed its guidance of adjusted FIFO EBITDA in the range of $90 million to $95 million driven by net retail store sales, excluding pharmacy resale activity, in the range of $1.72 billion to $1.736 billion. Total same-store sales are expected to grow between 3.3 percent to 4.3 percent.