Rite Aid Corporation Earnings: Margins Shrink as Costs Rise

Rite Aid Corporation’s (NYSE:RAD) second quarter loss narrowed, beating estimates. Rite Aid Corporation 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 Second Quarter

Results: Loss narrowed to $92.3 million (loss of 11 cents per diluted share) from $197 million (loss of 23 cents per share) in the same quarter a year earlier.

Revenue: Rose 1.8% to $6.27 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: RAD beat the mean analyst estimate of a loss of 18 cents per share. Analysts were expecting revenue of $6.36 billion.

Quoting Management: Standley, Rite Aid President and CEO. “Customers are responding positively to our sales initiatives, including our highly popular and fast-growing wellness + loyalty program, which now has over 44 million enrolled members. Our positive same store sales growth, along with continued reductions in operating costs, drove an increase in adjusted EBITDA.”

Key Stats:

Gross margin shrank 0.3 percentage point to 26.3%. The contraction appeared to be driven by increased costs, which rose 2.2% from the year earlier quarter while revenue rose 1.8%.

The company has now beaten estimates the last two quarters. In the first quarter, it topped expectations with a loss of -6 cents versus a mean estimate of a loss of 12 cents per share.

Over the last five quarters, revenue has fallen an average of 0.7% year over year. The biggest drop came in the second quarter of the last fiscal year, when revenue fell 2.5% from the year earlier quarter.

Competitors to Watch: Walgreen Company (NYSE:WAG), PetMed Express, Inc. (NASDAQ:PETS), GNC Holdings Inc (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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(Source: Xignite Financials)