Rite Aid posts lower earnings in quarter $52 million charge taken in purchase of Thrifty

April 01, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

Rite Aid Corp. took a $52 million charge in the fourth quarter for its purchase of Thrifty PayLess stores and posted net income of $10 million, or 9 cents a share, compared with $56.9 million, or 68 cents a share, for the fourth quarter of the year before.

Despite the decline, the Camp Hill, Pa., drugstore chain's earnings met analysts' expectations, and on a day when the stock market fell 157.11 points, Rite Aid lost only 12.5 cents to close at $42.

The company said income from operations, which excludes the charge, rose to 75 cents a share, or $87.6 million, compared with 68 cents a share, or $57 million, for the quarter ended March 1 last year.

"I think the quarter was complicated by some nonrecurring items. Taking those away, the earnings were in line with what people expected," said Sally Wallick, a retail analyst with Legg Mason Wood Walker Inc. in Baltimore.

The Thrifty purchase also jolted sales upward. With 1,007 stores added this past quarter, sales rose 85.7 percent for the quarter to $2.657 billion from $1.430 billion the year before.

For the year, sales rose 28 percent to $6.97 billion from $5.45 billion.

Sales for Rite Aid stores that have been open at least a year rose 14.4 percent for the quarter. Same-store sales are considered a key indicator of retailer's health.

Rite Aid's same-store sales for the year increased by 7.9 percent. Its earnings, before the nonrecurring charge, were $202.9 million, or $2.20 a share, compared with $158.9 million, or $1.90 a share, last year. In the first quarter, Rite Aid took a charge of 12 cents a share for costs associated with an attempted merger with Revco D.S. Inc.

The combined Rite Aid and Thrifty chain is the second largest in the nation, with more than 3,500 stores and annual revenues of more than $10 billion. The largest chain, Walgreen Co., said yesterday that net earnings for the second quarter, which ended Feb. 28, rose 16 percent to a record $147 million, or 59 cents a share, from $126.8 million, or 51 cents a share, in the year-ago period.

"I think that whole group is a very defensive group," said Jeffrey L. Pittsburg at Goldis-Pittsburg Institutional Services.

Pub Date: 4/01/97

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