Rite Aid Lowers Financial Projections

Tuesday, September 7th 2004, 10:14 am
By: News On 6

CAMP HILL, Pa. (AP) _ Rite Aid Corp. said Tuesday that it is lowering its financial projections for the current fiscal year, citing slowing pharmacy sales and lower-than-expected reimbursement rates paid by insurance companies and other health plans. Its shares fell more than 13 percent in morning trading.

The company said it expects sales for the fiscal year ending Feb. 26, 2005, to be between $16.9 billion and $17 billion, with sales at stores that have been open for at least one year improving 2.75 percent to 3.25 percent.

It had previously advised its total sales would be between $17.1 billion and $17.3 billion, with same store sales improving 3.75 percent to 4.75 percent.

Net income for fiscal 2005 is expected to be between $122 million and $150 million, or between 16 cents and 22 cents per diluted share, compared to its previous guidance of net income between $121 million and $167 million.

Analysts surveyed by Thomson First Call had expected earnings of 28 cents a share for fiscal 2005 on revenue of $17.37 billion.

``While we are disappointed with current sales trends, we believe this is a near-term situation and have initiatives in place ... to address the issue,'' said President and CEO Mary Sammons, citing intensified efforts to gain pharmacy customers in key markets.

Rite Aid also said adjusted earnings before taxes, interest, depreciation and amortization would be between $770 million and $800 million, compared to previous guidance of between $800 million and $850 million.

Rite Aid also expects to open more than 30 new and relocated stores in the current fiscal year, and another 100 in fiscal 2006.