BANGALORE (Reuters) - Rite Aid Corp (RAD.N), the third-largest U.S. drugstore chain, posted a fourth-quarter loss due to a big tax charge and merger-related costs, and forecast weak 2009 results, sending its shares down as much as 8 percent.
Excluding the charge and other items, loss for the quarter was narrower than the market estimate -- a respite for Rite Aid that has lately been plagued by weak holiday and slow flu seasons, and cheap generic drugs cutting into sales.
For 2009, Camp Hill, Pennsylvania-based Rite Aid forecast a net loss that was more than double the market estimate, citing slower prescription growth and pharmacy reimbursement rate pressures, amid a challenging economic environment.
Rite Aid stores fill prescriptions, which account for nearly two-thirds of sales, and sell health and beauty aids, convenience foods, greeting cards, among other items.
The retailer posted a net loss of $952.2 million, or $1.20 a share, compared with a profit of $15.1 million, or a penny a share, a year earlier.
The latest quarter’s loss includes $1.12 a share related to an income tax charge, and other expenses connected to its acquisition of the Brooks and Eckerd drugstore chains from Canada’s Jean Coutu Group (PJC) Inc (PJCa.TO) last year.
Excluding items, Rite Aid would have posted a loss of 6 cents a share for the latest quarter, it said in the call.
Revenue rose 51 percent to $6.82 billion, while same-store sales rose 1.3 percent -- consisting of a 1.4 percent pharmacy same store sales increase and a 1 percent rise in front-end same store sales.
Analysts on average expected a loss of 8 cents a share, before special items, on revenue of $6.89 billion, according to Reuters Estimates.
“The quarter started off slowly but we finished with solid same-store sales increases in both pharmacy and front end in January and February,” company CEO Mary Sammons said in a conference call with analysts.
The number of prescriptions increased, but pharmacy same-store sales were hit by the introduction of new generics, the company said.
Same-store sales this quarter do not include the Brooks Eckerd stores, where front-end sales were negative during the quarter.
The company bought the Brooks and Eckerd drugstore chains from Canada’s Jean Coutu Group Inc (PJCa.TO) in 2007 for about $4 billion to compete better with larger rivals Walgreen Co WAG.N and CVS Caremark (CVS.N).
The company forecast a net loss of 34 cents to 48 cents a share for 2009, on sales of $26.7 billion to $27.2 billion.
Analysts were expecting a loss of 15 cents a share, on revenue of $27.27 billion.
“As we’ve said in the past, we are recession resistant, but not recession-proof,” another company official said on the company’s conference call.
Shares of Rite Aid, which operates more than 5,000 stores, were trading down 14 cents to $2.60 on the New York Stock Exchange.
Additional reporting by Dhanya Skariachan in Bangalore; Editing by Amitha Rajan