New York City, Standard & Poor’s Ratings Services revised its outlook on Camp Hill, Pa.-based Rite Aid Corp. to negative from stable. Ratings on the drug retailer, including the ‘B+’ corporate credit rating, were affirmed. “The outlook revision is based on concerns over continued poor sales trends in Rite Aid’s pharmacy business and that credit protection measures are likely to deteriorate if the company is unable to reverse the negative sales trend,” said Standard & Poor’s credit analyst Diane Shand. The company’s same-store sales have been well below its major competitors since June 2004.
The ratings reflect the challenges Rite Aid faces in improving operations at its drugstores amid intense competition. They also reflect the company’s significant debt burden and thin cash flow protection, according to Standard & Poor’s.