Rite Aid shares rise a 2nd day amid meetings

Investors, analysts hear earnings hit is short-term

Drugstores

May 05, 1999|By BLOOMBERG NEWS

CAMP HILL, Pa. -- Rite Aid Corp. shares rose yesterday for a second day as executives of the third-largest U.S. drugstore chain met with investors to reassure them about the retailer's prospects, analysts said.

The meetings are the first by Rite Aid executives since a warning March 12 that earnings would miss estimates due to the costs of an aggressive expansion. Its shares fell 39 percent that day.

The executives are telling investors and analysts that the problems that hurt earnings -- including the purchase of pharmacy benefits manager PCS Health Systems in January, addition of 224 stores and expansion of 354 in 1998 -- are short-term issues, said Raymond James analyst James Kumpel.

"It reminds people who have written them off why they play such an important role in the health care business," Kumpel said.

Company officials met with investors last week in London at a conference sponsored by Goldman Sachs Group Inc. They have continued their meetings this week, including a Lehman Brothers Retailing Seminar in New York on Monday.

Rite Aid officials could not immediately be reached for comment. Its shares rose $2.0625 yesterday to $27.875, after a $2.50 gain Monday.

Pub Date: 5/05/99

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