Rite Aid profit jumps 34%, buoyed by prescription sales 31 cents a share posted for 2nd quarter


September 15, 1998|By BLOOMBERG NEWS

CAMP HILL, Pa. -- Rite Aid Corp., the nation's third-largest drugstore chain, said its second-quarter profit rose 34 percent on increased prescription-drug sales.

Profit before a charge rose to $81.2 million, or 31 cents a diluted share, from $60.6 million, or 24 cents, a year ago.

Rite Aid said its profit was boosted by a strong demand for prescription drugs, which accounted for 53.4 percent of total sales. In last year's quarter, prescription drugs accounted for 50.3 percent of sales.

Sales for the quarter ended Aug. 29 rose 14 percent, to $3.01 billion from $2.63 billion last year. Same-store sales -- sales at stores open at least a year -- rose 7.8 percent.

Rite Aid, which operates 3,898 stores -- 173 in Maryland -- said it closed 155 smaller stores during the quarter and plans to close 165 more by the fiscal year's end. It added 43 drugstores and enlarged or relocated 68 stores.

The closings are part of the company's plan to exit small, strip-center style stores and open freestanding units to compete better with other drug retailers. Companies such as Wal-Mart Stores Inc. have stepped up competition, as conventional drugstore retailers have been losing customers to larger discounters that have one-stop shopping for goods and pharmaceuticals.

Rite Aid's bigger stores usually generate more customer traffic and higher sales. The company is third in sales behind industry leader Walgreen Co. and No. 2 CVS Corp.

In the most recent quarter, a charge of $173.8 million, or 62 cents a diluted share, for the store closings, resulted in a loss of $92.7 million, or 31 cents.

Pub Date: 9/15/98

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