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Rite Aid suffers losses, expects flat performance in fiscal 2011

BY Michael Johnsen

CAMP HILL, Pa. Rite Aid revenues dropped 2.4% for its fiscal year ended Feb. 27, the chain reported Wednesday morning, reaching revenues of $25.7 billion and posting a net loss of $506.7 million. Rite Aid attributed the revenue decline to 121 fewer stores and a drop in same-store sales.

“It was a difficult [fourth] quarter with continued weak consumer demand, a weaker cough, cold and flu season than last year and continued pressure on pharmacy reimbursement,” stated Mary Sammons, Rite Aid chairman and CEO. “But our team did a good job of improving front-end margins and holding tight on expenses. Thanks to our working capital initiatives, we moved into the new fiscal year with a strong liquidity position.”

For fiscal 2011, which started in March, Rite Aid is projecting relatively flat performance, with sales falling between $25.2 billion and $25.6 billion and same-store sales ranging between a 1% decline and a 1% increase. Net loss for fiscal 2011 is expected to be between $355 million and $570 million.

Same-store sales for the year decreased 0.9%, consisting of a 2.9% front-end same-store sales decrease and a 0.1% increase in pharmacy same store sales. The number of prescriptions filled in same stores increased 0.8%. Prescription sales accounted for 67.9% of total revenue, and third party prescription revenue was 96.2% of pharmacy sales.

For the year, the company opened 17 new stores, relocated 41 stores, remodeled eight stores and closed 138 stores. Stores in operation at the end of the year totaled 4,780.

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Survey notes rise in MP3 player usage while driving

BY Allison Cerra

NEW YORK Drug stores should get involved in the consumer electronics game, as the number of people who listen to an iPod or MP3 player continues to rise.

According to a survey of 1,753 people ages 12 years and older, 24% of people have listened to music devices while connected to a car stereo, survey conductors from Arbitron and Edison Research revealed. Additionally, the new national study showed that 44% of all Americans ages 12 years and older own an iPod or MP3 player. Among that group, 54% have connected their players for listening in the car.

“The car is clearly a crucial battleground for people’s attention, and our study shows that most of those who do listen in this fashion do so more than once a week,” said Larry Rosin, Edison Research president.

This is the 18th in a series of studies Arbitron and Edison have conducted since 1998 on topics relating to the Internet and new media.

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FTC clears Walgreens’ acquisition of Duane Reade

BY Allison Cerra

DEERFIELD, Ill. Walgreens has received regulatory clearance from the Federal Trade Commission needed to acquire Duane Reade, the drug store chain announced Tuesday.

“We’re clear to move forward and complete the Duane Reade acquisition, which will immediately give Walgreens a leading position in the nation’s largest drug store market,” said Walgreens president and CEO Greg Wasson. “We look forward to combining the strengths of our two companies to best serve our customers in the New York metropolitan area and the many communities we serve nationwide, while also creating real value for our shareholders.”

Last month, Walgreens signed a definitive agreement under which Walgreens will acquire Duane Reade from affiliates of Oak Hill Capital Partners. In the cash transaction, Walgreens will acquire all 257 Duane Reade drug stores in the New York metropolitan area, as well as the corporate office and two distribution centers.

Walgreens expects to complete the acquisition in early to mid-April.

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