Rite Aid reports net revenue, $222 million loss for Q2
CAMP HILL, Pa. Rite Aid on Thursday reported revenues of $6.5 billion and a net loss of $222.million, or $0.27 per diluted share, for its fiscal second quarter ended Aug. 30. Solid front-end and pharmacy sales in core Rite Aid stores were offset by the expected decrease in sales at acquired stores, the company reported.
Overall same-store sales increased 0.6 percent year-over-year due to solid performance in core stores. Same-store sales in Brooks/Eckerd stores continued to show progress, narrowing to a decline of 4.1 percent from the year-ago period versus 6.7 percent in the first quarter.
Front-end same store sales in the acquired stores turned positive for the month of August, Rite Aid noted.
Rite Aid also revised its fiscal 2009 guidance based on a number of factors, the company reported, including current sales trends, a longer-than-expected turnaround of Brooks Eckerd pharmacy sales, economists’ forecasts for continued weakness in the economy, the closing of underperforming stores and the company’s planned cost reductions for the remainder of its fiscal year.
Sales are expected to be between $26 billion and $26.5 billion in fiscal 2009, from a range of $26.7 billion and $27.2 billion. New same-store sales guidance is expected to improve 1.5 percent to 3 percent over fiscal 2008, compared to previous guidance of 2 percent to 4 percent in improvements. Adjusted EBITDA is expected now to be between $950 million and $1.025 billion, compared to previous guidance of $1 billion and $1.1 billion.
Net loss for fiscal 2009 is expected to be between $445 million and $535 million or a loss per diluted share of $.56 to $.67, compared to previous guidance of a net loss falling between $260 million and $375 million. Capital expenditures, excluding proceeds from sale and leaseback transactions, are expected to be approximately $550 million. Proceeds from sale and leaseback transaction are expected to be approximately $200 million.
“In this tough retail environment, our core stores delivered solid performance, we made significant progress building our acquired stores’ front-end sales, we took steps to increase our financial flexibility and we largely completed the integration of Brooks/Eckerd,” stated Mary Sammons, Rite Aid chairman and chief executive officer.
“We also improved our gross profit rate in spite of what has turned out to be a heavily promotional environment in pharmacy as well as front end.
“While improving the acquired stores’ pharmacy business will take longer than originally expected, we are encouraged by the trends we’re seeing in these stores and the initiatives we have in place to grow prescriptions, even in today’s low growth environment. The stores look great, our associates are upbeat and customers we lost during the disruption of the integration are starting to return. With the Brooks/Eckerd integration completed in just a few days, we will be in a better position to more fully realize the strategic benefits of the acquisition,” Sammons said.
During a conference call Thursday morning, Sammons reported that only 25 former Brooks/Eckerd stores remained to receive a minor remodel.
The company also announced a series of actions to further reduce costs and improve cash flows in the second half of its fiscal year, including reducing operating expenses through improved efficiency; cutting capital expenditures by approximately $50 million; and pursuing additional sale and leaseback transactions.
“The increasingly challenging economic environment underscores the importance of managing our business prudently, while maintaining our commitment to delivering the high level of service our customers expect,” Sammons said. “Moving forward, we are taking additional steps to reduce costs to further strengthen our financial position and build on the steps we have taken to improve working capital, which is already delivering results.”
The company said it expects to use free cash flow to reduce the outstanding balance on its revolving credit facility at the end of fiscal 2009.
Unapproved eye treatments get yanked by FDA
NEW YORK The Food and Drug Administration has told companies to stop selling eye solutions for use during surgery and for treating lesions without regulatory approval, citing dangerous side effects.
The drugs include ophthalmic balanced salt solutions for the eyes and topical drugs containing the papaya-based compound papain.
A number of companies have sold the unapproved eye drugs, including Baxter International and Hospira.
ImClone rejects bid from Bristol-Myers Squib
NEW YORK Biotech ImClone has rejected an acquisition bid by Bristol-Myers Squibb, according to a letter that ImClone chairman Carl Icahn sent to Bristol chairman and chief executive officer James Cornelius Tuesday, calling the bid “absurd.”
On Monday, Bristol announced that it would increase its $60-per-share bid for the biotech to $62 a share, though this still fell short of the $70-per-share offer that ImClone has received from a thus-far undisclosed pharmaceutical company.
“Your letter of yesterday contains inaccuracies which are misleading to our shareholders,” Icahn wrote. “Your statements that there have not been any meaningful discussions concerning your proposal have no basis in fact. … I also told you a large Pharma company had offered $70 subject to due diligence and the diligence will be over on Sunday, September 28, 2008. In light of these facts, your hostile tender of $62, at this time, seems absurd.”
At the end of the letter, Icahn didn’t mince words.
“If you wish to make your attorneys wealthier, I can show you more productive ways to do so,” he wrote. “Or, if you simply want publicity, I can also help you in that regard without your having to make unnecessary expenditures.”