As Rite Aid completed a store purchase deal with Walgreens and appointed a new president, the drug store chain saw its comparable store sales decline in the second quarter.
Comparable store sales for the second quarter decreased 3.4% over the prior year, consisting of a 4.6% decrease in pharmacy sales and a 0.9% decrease in front-end sales, which includes revenues from general merchandise such as home goods. Overall revenues were $7.68 billion versus $8.03 billion in the second quarter the year before.
For the second quarter, Rite Aid posted net income of $170.7 million, or 16 cents per diluted share, versus $14.8 million, or one cent per diluted share, in the fiscal year earlier. The improvement in operating results was due primarily to receipt of the $325 million merger termination fee from Walgreens Boots Alliance for the termination of a previous merger agreement.
Rite Aid’s adjusted net loss was $15.6 million, or one cent per diluted share, versus adjusted net income of $36.4 million, or three cents per diluted share, in last year’s second quarter. A decline in pharmacy gross profit due to lower reimbursement rates hurt earnings.
“While our performance for the quarter reflects a challenging reimbursement rate environment and the effects of an extended merger and asset sale process, securing regulatory clearance for the amended asset sale agreement with Walgreens Boots Alliance gives us a clear path forward to realize the benefits of the transaction and implement our plans to deliver improved results. In addition, we’ve announced that Kermit Crawford, a proven leader with extensive retail pharmacy experience, is joining Rite Aid as president and chief operating officer to further strengthen our leadership team,” said John Standley, Rite Aid chairman and CEO.
Earlier this month, Rite Aid secured regulatory clearance for an amended agreement with Walgreens Boots Alliance, whereby that company would purchase 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.38 billion.