Rite Aid Q1 loss more than doubles; identifies CEO candidates
Rite Aid reported disappointing results for its first quarter amid sluggish sales.
In separate news, cheered investors as Amazon announced it is partnering with Rite Aid to launch “Counter,” dedicated counters in Rite Aid stores where Amazon customers can pick up their purchases. The service will be rolled out across 1,500 Rite Aid locations by the end of the year.
The drugstore operator reported a net loss from continuing operations totaled $99.3 million, or $1.88 a share in the quarter ended June 1, compared with a net loss of $41.7 million, or 79 cents a share, in the year-ago period. It posted an adjusted non-GAAP net loss of $7.5 million, or $0.14 per share. Analysts were expecting an adjusted net loss of $0.07 per share.
Revenue totaled $5.37 billion compared to $5.39 billion last year. Retail pharmacy segment revenues fell 0.8% to $3.86 billion, which the company attributed to a reduction in store count. Revenues in the pharmacy services segment rose 1.5% to $1.57 billion, due to an increase in Medicare Part D revenue.
Same-store sales from retail pharmacy increased 1.4%, consisting of a 2.3% increase in pharmacy sales and a 0.3% decrease in front-end sales. Front-end same-store sales, excluding cigarettes and tobacco products, increased 0.3%.
Though much of the net loss was related to higher restructuring-related costs, decreased adjusted EBITDA and higher income tax expense, leadership at the Camp Hill, Pa.-based retailer also identified continued reimbursement pressures on the pharmacy side as a hindrance.
“While first-quarter results did not meet our expectations due to prescription reimbursement rate pressure in the retail pharmacy segment and margin compression in the pharmacy services segment, we are pleased with the improvements in our top-line growth and operating efficiency in retail pharmacy and Medicare Part D revenue growth in the pharmacy services segment,” CEO John Standley said.
On the company’s earnings call, Standley noted that the company’s digital business rose 115% in the quarter. Additionally, Rite Aid’s partnership with Amazon to install Amazon Lockers in its stores continues, with more than 300 stores equipped with the pickup option and plans to outfit 900 stores with the lockers by the end the second quarter.
Standley also said the company’s board has identified candidates for his successor as CEO, and currently is in the process of interviewing and selecting candidates.
“Recognizing that the search is the board’s highest priority, the board is making significant progress towards selecting a strong leader that will help Rite Aid be successful,” he said.
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