Rite Aid Beats Q1 Earnings Estimate But Weak Front-End Sales

Rite Aid Corp. posted net income of $18.8 million, or two cents per diluted share, for its fiscal first quarter ended May 30 versus $41.4 million, or four cents per share, in the year-earlier period. Comparable store sales for the quarter advanced 2.9% versus the previous year's quarter, with front-end sales, including general merchandise such as home goods, increasing 0.6%, the company reported.

Revenues were $6.65 billion, Rite Aid stated, versus $6.47 billion in last year's quarter.

The decrease in net income resulted primarily from interest and other incremental pre-tax costs, totaling $36 million, or two cents per share on an after-tax basis, incurred in the company's pending acquisition of EnvisionRx. An increase in adjusted EBITDA partially offset those one-time charges, the company asserted.

Adjusted for the acquisition costs, Rite Aid's earnings beat a Zacks Investment Research analyst average estimate by two cents, however, some observers stated that comps fell short of expectations.

"Our first-quarter results reflect the continued progress we're making in positioning Rite Aid for growth, including increases in same-store sales, same-store prescription count and adjusted EBITDA," said Rite Aid chairman and CEO John Standley. "We generated these positive results while also making significant strategic investments to continue our transformation into a retail health care company. Through initiatives like adding RediClinics to Rite Aid stores, launching the ground-breaking wellness+ with Plenti program and our pending acquisition of EnvisionRx, we remain highly focused on delivering a differentiated experience to our customers and a higher level of care to the communities we serve."

In the first quarter, Rite Aid relocated two stores, remodeled 108 and expanded one, bringing the total number of recast wellness-format stores chain wide to 1,741. The company also closed four stores, resulting in an overall store count of 4,566 at quarter's end.