Rite Aid’s struggles aren’t easing. The retailer says revenues for the third quarter slipped to $6.1 billion, down from $6.2 billion in the previous year. And its net loss swelled to $67.1 million, up from a net loss of $36.1 million in the year-ago period.
The results, pressured by less revenue from vaccination and testing, came in a bit ahead of what had been forecast, with a 4.4% increase in same-store prescriptions and a 2.7% gain in same-store results on front-end purchases.
Still, the Philadelphia-based retailer also reduced its outlook for the months ahead. “Based on recent trends, we are lowering our full-year guidance due to headwinds including pharmacy margin, seasonal markdowns and higher shrink,” says Heyward Donigan, president and chief executive officer, in its announcement.
It now expects full-year revenues of between $23.7 billion and $24 billion.
The company’s stock fell to near-record lows after the announcement as more investors looked for the exit.
“There is a crumb of comfort in the fact front-of-store sales are up by 2.2% on a comparable basis, which reverses the pattern of decline which set in over the first half of the year,” writes Neil Saunders, managing director of GlobalData, in his comment on the results. “Sales of flu and cold products, as well as some better numbers in beauty, have aided growth -- although it must be noted that the uplift is still well below the prevailing rate of inflation.”
But overall, “the bottom line shows a more definitive and unfortunate trend. This quarter, Rite Aid posted a net loss of $67.1 million. Operationally, Rite Aid is just about profitable, albeit with very low margins, but by the time interest expenses are added into the mix, the company is deeply in the red.”
Like rivals CVS and Walgreens, Rite Aid faces increased competition from mass merchants, supermarkets, and dollar stores. “Unfortunately, Rite Aid is more exposed to this than other drug store chains because it serves more lower-income areas and more rural areas where value players predominate,” writes Saunders.
Rite Aid has about 2,200 stores in the U.S.