Rite Aid Loss Narrows as Analysts Remain Skeptical
Although Rite Aid Corp. (NYSE:RAD) announced Thursday morning that its second-quarter fiscal loss has narrowed with a steady increase in summer sales, analysts predict a muted profit growth over the next few quarters.
According to CEO John Stanley, the company has had “three consecutive quarters of same store sales growth.”
An increase in sales means Rite Aid’s revenue climbed 2 percent in the second quarter of the fiscal year, making their total revenue at 6.27 billion, Rite Aid Corp. announced Thursday.
Last year at this time, the company lost 23 cents per share, or 199.3 million, while this year losses decreased to 11 cents per share, or 94.7 million.
The company began bouncing back last winter, after a year and a half of floundering.
These statistics reveal Rite Aid’s long term health, because analysts did not account for stores open less than a year.
The growth in summer sales lies in Rite Aid’s vast sales selection, which ranges from food, shoes, beach umbrellas and prescriptions.
Wholesale items, such as canned foods and inexpensive milk, rake in profit.
The biggest jump for the past year occurred during summer storm Hurricane Irene, when people stocked up on survival items, such as food and flashlights.
Flu shot sales also serve as a lucrative method of income because they are inexpensive, fast, require no co-pay, and are covered by most insurance companies.
Stanley attributes their newly formed “loyalty + wellness program, which now has over 44 million enrolled members,” as another means of income.
Remodeling new stores, which Stanley refers to as “wellness stores,” has also attracted the masses.
“Customers tell us they like the look and feel of our new format which offers expanded clinical services, new health and wellness product offerings and our unique on-site Wellness ambassadors.”
Rite Aid stands third in line behind Walgreens and CVS .
Although slowly improving, analysts expect Rite Aid to lose 18 cents per share for the 2012 fiscal year.
Analyst Edward Kelly told Forbes Magazine that he continues to rate the stock as “neutral” and visibility into a longer-term turnaround remains low.
"This is due in part to prescription reimbursement pressure and minimum front-end margin expansion," analyst John W. Ransom told Forbes.
