Rite Aid posts higher profits, exceeding forecasts
By Gilles Castonguay
NEW YORK, Dec 14 (Reuters) - Rite Aid Corp. <RAD.N>, a leading U.S. drug-store chain, rang up strong growth in sales and profits in its fiscal third quarter, beating market earnings expectations by a penny a share.
Rite Aid, based in Camp Hill, Pa., said on Monday that earnings rose to $86.9 million for the quarter ended Nov. 29, up 27.9 percent from $67.9 million for the same period a year ago. Diluted earnings per share rose to 33 cents against 26 cents a year earlier, it said.
Analysts estimated earnings at an average 32 cents a share, according to First Call Corp., which tracks market forecasts.
Rite Aid, which operates more than 3,800 stores in 32 states, said sales for the quarter rose 8.2 percent to $3.1 billion from $2.9 billion a year ago. Sales at stores open at least a year rose 8.3 percent, it added.
"All in all, it was a very good quarter," said Joseph Ronning, an analyst at Brown Brothers Harriman. "There were good, strong sales on the East Coast, led by strong pharmaceutical sales."
Despite the strong performance, Rite Aid shares ended $1.94 lower at $41.19 on the New York Stock Exchange, bedeviling some analysts.
"I can't explain it," said Philip Muldoon at McDonald & Co. Investments. "They met my forecast."
Rite Aid spokeswoman Sarah Datz told Reuters the chain attributed the rise in sales and profits to greater drug use by the country's aging population, as well as the introduction of new drugs such as Pfizer Inc.'s <PFE.N> Viagra potency pill.
Rite Aid said prescription drug sales accounted for 56.3 percent of total sales in the third quarter. A year ago, the figure was 51.4 percent.
Datz said food, health and beauty aids comprised the remainder of sales.
On Nov. 17, Rite Aid announced its $1.5 billion acquisition of PCS Health Systems from Eli Lilly and Co. <LLY.N>, placing it among the country's largest providers of prescription drug benefits to employers and other plan sponsors.
Frank Bergonzi, the chain's chief financial officer, told analysts in a conference call that he expected PCS to raise earnings by 1 cent a share to 3 cents in the next fiscal year. |
