Rite Aid Corp. (NYSE: RAD) on Thursday reported a smaller second-quarter loss, but lowered its expectations for the fiscal year due to the weak economy and high unemployment, according to Associated Press.
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Rite Aid said economic conditions particularly hurt for sales of nonpharmacy, or "front end," items like food and cosmetics. It also expects weaker profit margins.
The company said it lost $120.4 million, or 14 cents per share, after preferred dividends in the three months ended Aug. 29. That compares with a loss of $227.4 million, or 27 cents per share, a year ago.
Analysts expected a larger loss of 16 cents a share for the latest quarter, according to Thomson Reuters.
Revenue fell 3 percent to $6.3 billion from $6.5 billion a year ago and missed Wall Street estimates of $6.4 billion. The company has closed more than 100 stores over the last year, including 13 in the latest quarter.
For the full year ending in February, Rite Aid now expects to lose $390 million to $615 million, or 48 cents to 74 cents per share. In June, it projected a loss of $265 million to $490 million, or 33 cents to 59 cents per share. It cut its revenue forecast to a range of $25.7 billion to $26.2 billion from $26.3 billion to $26.7 billion.
Analysts expect a loss of 47 cents per share and $26.09 billion in revenue.
The company expects same-store sales to come in between a 1 percent decrease and a 1 percent increase. Previously Rite Aid said those sales would rise 0.5 percent to 2.5 percent.
In the second quarter, Rite Aid lowered its selling, general and administrative expenses to $1.65 billion from $1.78 billion a year ago, and also reported lower lease termination and impairment charges, and a smaller loss on debt modification and retirements.
Rite Aid said its same-store sales fell 1.1 percent for the quarter, with front end sales down 4.9 percent and pharmacy revenue rising 0.8 percent at those stores. Same-store sales, or sales at locations open for at least a year, are seen as a key measurement of retailer health.
At the end of the quarter, Rite Aid ran 4,812 stores in 31 states and Washington, DC. During the second quarter, it closed 16 stores, opened three, relocated 10 and remodeled one location. It plans to close about 117 stores this fiscal year.
In morning trading, Rite Aid shares lost 19 cents, or 9.7 percent, to $1.76.
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