Rite Aid Corp Earnings Cheat Sheet: Increased Costs Strains Margins

Rite Aid Corporation’s (NYSE:RAD) third quarter loss narrowed, beating estimates. Rite Aid operates a retail drugstore chain in the United States. It operates its drugstores in 31 states across the country and in the District of Columbia.

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Rite Aid Earnings Cheat Sheet for the Third Quarter

Results: Loss narrowed to $52 million (loss of 6 cents per diluted share) from $79.1 million (loss of 9 cents per share) in the same quarter a year earlier.

Revenue: Rose 2% to $6.3 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: RAD beat the mean analyst estimate of a loss of 12 cents per share. Analysts were expecting revenue of $6.29 billion.

Quoting Management: “We remain pleased with the continued improvement in our top-line results, highlighted by same store sales and Adjusted EBITDA increases for the fourth consecutive quarter,” said John Standley, Rite Aid President and CEO. “Our pharmacy sales growth was strong this quarter, with key drivers being our well-planned and executed flu immunization program and continued favorable customer response to our wellness+ loyalty program.”

Key Stats:

Gross margin shrank 0.1 percentage point to 26.3%. The contraction appeared to be driven by increased costs, which rose 1.8% from the year earlier quarter while revenue rose 1.6%.

The company has now topped analyst estimates for the last three quarters. It beat the mark by 6 cents in the second quarter and by 6 cents in the first quarter.

The company’s revenue has now risen for two straight quarters. In the second quarter, revenue increased 1.8% to $6.27 billion from the year earlier quarter.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the fourth quarter has moved from a loss of 12 cents a share to a loss of 14 cents over the last ninety days. The average estimate for the fiscal year is now 45 cents per share, a rise from the 51 cents predicted ninety days ago.

Competitors to Watch: Walgreen Company (NYSE:WAG), PetMed Express, Inc. (NASDAQ:PETS), GNC Holdings Inc (NYSE:GNC), CVS Caremark Corporation (NYSE:CVS), China Nepstar Chain Drugstore Ltd. (NYSE:NPD), Walmart (NYSE:WMT), Target (NYSE:TGT), Costco (NASDAQ:COST).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)