Retail drugstore chain operator Rite Aid Corp. (RAD) Thursday reported a swing to profit in its fourth quarter, significantly above analysts' estimates. Earnings were benefited by margin growth from new generic introductions as well as increased prescriptions. Topline, meanwhile, declined and missed analysts' estimates on lower same store sales and absence of last year's one extra week.
Looking ahead for fiscal 2014, the company provided a wide range in earnings forecast. In pre-market activity, Rite Aid shares climbed $0.15 or 8.38 percent, and are currently trading at $1.94.
In its fourth quarter, net income attributable to common stockholders was $124.43 million or $0.13 per share, as against a loss of $163.81 million or $0.18 per share last year. On average, seven analysts polled by Thomson Reuters expected loss of $0.02 per share for the quarter. Analysts' estimates typically exclude one-time items.
Adjusted EBITDA margin grew to 5.3 percent from prior year's 3.8 percent thanks to an improvement in pharmacy gross margin resulting from new generic introductions and an increase in prescriptions filled at comparable stores.
Revenues for the thirteen week fourth quarter, however, dropped 9.7 percent to $6.46 billion from $7.15 billion in the prior year fourteen-week fourth quarter. The decline in revenues reflected the one less week this year and the impact of lower cost generics on pharmacy sales. Six analysts estimated revenues of $6.45 billion for the quarter.
In the quarter, same-store sales slid 2 percent as 0.3 percent rise in the front end was offset by a 3.1 percent decrease in the pharmacy.
Pharmacy sales benefited from a 3 percent increase in the number of prescriptions filled in same stores, which was more than offset by an approximate 659 basis point negative impact from new generic introductions.
For fiscal 2013, attributable net income was $107.48 million or $0.12 per share, compared to last year's net loss of $378.59 million or $0.43 per share. Revenues for the 52-week fiscal year declined 2.8 percent to $25.39 billion from last year's 53 weeks. Same store sales edged down 0.3 percent.
Rite Aid Chairman, President and CEO John Standley said, "In addition to setting a new company record for full-year Adjusted EBITDA, we generated full-year net income for the first time since fiscal 2007."
Looking ahead for fiscal 2014, Rite Aid projects that net income would be between $45 million and $200 million, or $0.04 per share and $0.20 per share. The company projects annual sales between $24.9 billion and $25.3 billion with same-store sales expected to range from a decrease of 0.75 percent to an increase of 0.75 percent over last year.
Eight analysts project full-year earnings of $0.03 per share, on revenue of $25.24 billion.
Adjusted EBITDA is expected to be between $1.075 billion and $1.175 billion. Capital expenditures would be approximately $400 million for the year.
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