Rite Aid posted a soft third quarter following the news that it would sell 865 stores to Fred’s to pave the way for its merger with Walgreens.
For the third fiscal quarter ended November 26, Rite Aid Corp. posted net income of $15 million, or one cent per diluted share, compared to $59.5 million, or six cents per diluted share, in the year-earlier period. Adjusted net income was $23.3 million, or two cents per diluted share, according to the company, versus $87.2 million, or eight cents per diluted share, in the quarter a year previous. An analyst average estimate published by MarketBeat called for adjusted earnings per diluted share of four cents.
Comparable store sales for the quarter decreased 3.4% from the prior year. Contributing to the comp decline was a 4.7% decrease in pharmacy sales and a 0.4% decrease in front-end sales, which include general merchandise such as household goods. Revenues for the quarter were $8.1 billion versus $8.2 billion in the prior-year third period.
On December 20, Rite Aid declared its intent to sell 865 stores to Fred’s, Inc. for $950 million in an all-cash transaction in pursuit of its merger with Walgreens Boots Alliance, subject to United States Federal Trade Commission approval.
“Despite the difficult operating environment created by the extended duration of the merger process with WBA, our third quarter results show solid performance in our front-end business, good cost control and continued strong growth at our pharmacy benefit manager, EnvisionRx,” said John Standley, Rite Aid chairman and CEO. “Reimbursement rates remain our largest challenge, and we expect that to continue for the remainder of the fiscal year. Moving forward, we will remain focused on improving the health of our patients through clinical services like immunizations and medication adherence and converting additional stores to our highly successful wellness format.”
Rite Aid operates 4,547 stores.