Rite Aid's struggles continue; loses nearly $100 million in its first quarter
Earlier this year, Rite Aid said it would close 117 stores over the next year as the company looks to cut debt and expenses. Some analysts have speculated that the company needs to cut a large number of people given its large debt load. In the first quarter, the company closed 86 stores, relocated 17 stores and remodeled.
Rite Aid, which operates 4,825 stores, is floundering as it competes against larger rivals such as CVS Caremark Corp. (CVS) and Walgreens Co. (WAG), both of which trade for more than $30 a share. It also is being hurt by rising sales of generic drugs and a mild cold and flu season.
Though shares of the Camp Hill, Pa. company have surged nearly 300 percent his year, that figure should be taken with a grain of salt since the stock still barely trades over a $1.
For the fiscal quarter ended May 30, Rite Aid reported revenue of $6.5 billion and a net loss of $98.4 million, or 11 cents per share, according to a company press release. The company, which is struggling to pay down $6 billion in debt, has been able to refinance a major portion of the amount due in September 2010. Chief Executive Mary Sammons noted that Rite Aid is now in a "much stronger financial position today" with significant improvement in cash flow.
The company, though, remains in a weak position.
"As a result of the higher interest expense, the company expects the net loss for fiscal 2010 to be between $265 million and $490 million or a loss per diluted share of $.33 to $.59," according to the company. "The company reaffirmed its fiscal 2010 guidance for sales, adjusted EBITDA and capital expenditures."
Rite Aid has been down for so long that it's difficult to see how it can get back up.