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Rite Aid turns 4th-straight quarterly profit

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POSTED September 19, 2013 10:14 p.m.

CAMP HILL, Pa. (AP) — Shares of Rite Aid Corp. jumped Thursday after the drugstore chain reported its fourth-straight quarterly profit and raised its forecast for fiscal 2014.

Rite Aid earned $30 million, or 3 cents per share, in the three months that ended Aug. 31. That compares to a loss of $41.4 million, or 5 cents per share, a year ago.

The Camp Hill, Pa., company recorded a $62.2 million charge for some debt retirement due to a refinancing. A $23.5 million recovery from the settlement of a prescription drug antitrust case partially balanced that charge.

Revenue climbed about 1 percent to $6.28 billion.

Analysts expected, on average, a loss of 5 cents per share on $6.25 billion in revenue, according to FactSet.

Rite Aid is the nation's third-largest drugstore chain with 4,604 stores. It trails only Walgreen Co. and CVS Caremark Corp. in terms of locations.

The company said revenue at its established stores climbed 1 percent in the quarter. That included a 1.7 percent gain from pharmacy — which accounted for nearly 68 percent of total sales — and a slight drop from the front end, or rest of the store.

Revenue from stores open at least a year is considered a key indicator of a retailer's health, because it excludes volatility from stores that have recently opened or closed.

Rite Aid's interest expense also fell 17 percent in the quarter to $106.7 million, and selling, general and administrative costs dropped.

Last December, Rite Aid recorded its first quarterly profit since May, 2007. The company has worked to clean up its performance in recent years by closing hundreds of under-performing stores and installing a new wellness format in others. These stores have more organic food and natural personal care products and employees who can help customers find vitamins and nutritional supplements.

Rite Aid remodeled 109 more stores in its fiscal second quarter, bringing the total with its wellness format up to 1,019.

The drugstore chain said it now expects fiscal 2014 earnings to range between 18 cents and 27 cents per share on $25.1 billion to $25.3 billion in revenue.

Analysts expect, on average, earnings of 14 cents per share on $25.31 billion in revenue.

The company's stock jumped 13 percent, or 49 cents, to $4.20 in morning trading. The share price has more than tripled in value since closing 2012 at $1.36.


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