Rite Aid May Same Store Sales Rise 3.5%, Trims 2015 EPS Outlook; Shares Down 13%

(RTTNews) - Retail drugstore chain operator Rite Aid Corp. (RAD) reported Thursday a 3.5 percent increase in May same store sales, reflecting an improvement in pharmacy same store sales and front-end same store sales.

The company's shares are plunging nearly 13 percent after it trimmed earnings guidance for the full-year 2015, citing the expected generic purchase price reductions for the remainder of the year. However, the company maintained its annual sales outlook.

Camp Hill, Pennsylvania-based Rite Aid reported total drugstore sales of $2.48 billion for May, up 2.5 percent from $2.42 billion in the comparable month a year ago.

Same store sales for the month of May improved 3.5 percent, reflecting a 5.0 percent increase in pharmacy same store sales, which included a 156 basis points negative impact of new generic introductions.

Front-end same store sales for the month also edged up 0.5 percent, and prescription count at comparable stores increased 3.2 percent.

The company noted that prescription revenue accounted for 68.0 percent of drugstore sales, while third party prescription revenue represented 97.4 percent of pharmacy sales.

For the first quarter, same store sales increased 3.1 percent, with front-end same store sales remaining flat, and pharmacy same store sales increasing 4.6 percent.

Total drugstores sales for the quarter grew 2.6 percent to $6.43 billion from $6.26 billion in the prior-year quarter.

The company also provided preliminary financial results for the first quarter, expecting adjusted EBITDA between $275 million and $285 million, net income between $35 million and $45 million as well as earnings to be $0.04 per share.

On average, nine analysts polled by Thomson Reuters expect the company to report earnings of $0.08 per share for the first quarter. Analysts' estimates typically exclude special items.

The company noted that it expects results for adjusted EBITDA to trail the results for the previous year's first quarter due primarily to "higher-than-expected drug costs resulting from a delay in realizing the level of expected generic purchase price reductions and a greater-than-expected reduction in reimbursement rates."

For fiscal 2015, the company trimmed earnings guidance to a range of $0.30 to $0.40 per share from the prior forecast range of $0.31 to $0.42 per share, while continuing to project annual sales between $26 billion and $26.5 billion, with same store sales growth 2.5 to 4.5 percent.

Street is currently looking for full-year 2015 earnings of $0.39 per share, on annual revenues of $26.20 billion.

In Thursday's regular trading session, RAD is currently trading at $7.40, down $1.10 or 12.94% on a volume of 18.09 million shares.