what the hell happen to RAD? it was at like 13 yesterday.
*DJ Goldman Cuts Rite-Aid To Mkt Perform From Recommend List
(END) DOW JONES NEWS 10-12-99
10:05 AM
=DJ Rite Aid Reports 2Q Loss On Charge, Interest Costs
By Philana Patterson
This story was originally published late Monday.
NEW YORK (Dow Jones)--Rite Aid Corp. (RAD) reported a fiscal second quarter loss
resulting from charges related to closed and relocated stores, increased interest costs
associated with the cost of financing its acquisition of PCS Health Systems, higher
working capital needs as well as weak sales in its larger West Coast stores. The company
said the results were preliminary and unaudited.
After the market closed Monday, Rite Aid reported a loss of 26 cents a share for the
second quarter. Rite Aid didn't provide year-ago figures, saying it would soon restate
results from prior periods. First Call/Thomson Financial had put Rite Aid's second
quarter earnings at 24 cents a share.
In the second quarter of 1998, Rite Aid reported a loss of 31 cents a diluted share.
Excluding an extraordinary item of 62 cents a share related to the reserve for closing
320 stores and other charges, the company would have reported earnings of 31 cents a
share in the period. In June, results from the second quarter of 1998 were adjusted
upward by 2 cents a share for an accounting change.
Prior to the report Monday, Rite Aid shares took a beating. The stock fell 2 1/2, or
20%, to 10 on volume of 1.4 million, compared with 3.9 million average daily volume. The
stock fell past its previous 52-week low of 11 set Sept. 24.
Rite Aid blamed its poor results in the most recent second quarter on a charge of $34
million associated with the closure or relocation of 106 stores in the quarter and an
increase of $49 million in interest costs related to financing of the acquisition of
pharmacy benefits manager PCS, and higher working capital needs. Poor sales in the
company's larger West Coast stores also contributed to the shortfall. Sales of
non-pharmacy goods fell 3.5% from a year earlier with a 2% increase from East Coast
stores and a 6.2% decline from West Coast stores.
Rite Aid has already sold 38 of the West Coast stores and hopes to sell more than 200
additional locations. In addition to selling the stores, Rite Aid is considering the sale
of all, or a portion, of PCS, to reduce its debt.
Rite Aid is currently in negotiations with lenders to extend to April a $1.3 billion
credit revolver which is scheduled to mature on Oct. 29. During an earnings conference
call Rite Aid Chairman and Chief Executive Martin Grass said the company expects to have
a deal to extend the revolver complete within eight to nine days. By April, the company
said it hopes to have its asset sales complete to pay off the revolver.
If PCS is sold outright, Grass said the company still expects to get more than the
$1.5 billion it paid for it. In fiscal 2000 the unit is expected to have revenue of $985
million, compared with $723 million a year earlier. Rite Aid expects earnings before
interest, taxes, depreciation and amortization to rise to $132 million from $119 million
a year earlier.
In addition to recent staff cuts to reduce costs, Rite Aid is consolidating
distribution centers. On the East Coast these efforts are expected to save $12.5 million
and $28 million on the West Coast in fiscal 2001.
The company also said it would slow its store opening program to about 250 this year
and 150 a year in the following two years.
Rite Aid has had a number of bumps this year including earnings misses and a lawsuit
by the Florida Attorney General which alleges the company overcharged some cash paying
customers for prescriptions. Grass reiterated his belief the suit is without merit.
Grass said the company could not provide further earnings guidance until its
restatement is settled.
-By Philana Patterson; 201-938-5360
(END) DOW JONES NEWS 10-12-99
08:15 AM |
