Rite Aid (RAD) Down on Revised Guidance
Shares of the Rite Aid Corporation (RAD) were trading off -0.94 or -14.16 percent to $5.70 per share in premarket trading this morning, after the company report earnings that beat analyst expectations, but downwardly revised its outlook for the rest of the year. Rite Aid stock closed at $6.64 per share, up +0.23 or +3.59 percent in Wednesday's regular trading session.
Rite Aid reported second quarter net income of $127.8 million or $0.13 per share versus $32.8 million or $0.03 per share in the same period one year ago. The company attributed the jump in net income as a result of an increase in its Adjusted EBITDA to $364.2 million, compared to $341.6 million in the same period last year.
The increase was also in part due to a lower LIFO charge from pharmacy inventory reductions. In addition, the company declared a loss on the retirement of debt from the previous year which was somewhat offset by higher income tax expenses.
Revenues for the quarter came to $6.52 billion versus $6.28 billion in 2013's second quarter, a +3.9 percent increase, while same store sales rose +4.1 percent over the same period last year. Analysts were expecting the company to report a profit of +$0.06 per share on revenues of $6.48 billion.
Rite Aid reported the expansion of one store, the relocation of five stores and the remodeling of 117 stores in the quarter. In addition the company reported opening of only one new store and closing 10 stores, bringing total number of stores to 4,572.
Citing lower profitability from generic drugs that have lost exclusivity and new generic medicines, the company adjusted its guidance for the second half of its fiscal year 2015. Rite Aid is estimating adjusted EBITDA to be between $1.2 billion and $1.275 billion, with net income of between $223.0 million and $330.0 million with income per diluted share of between $0.22 and $0.33. Sales are forecast to be between $26.0 billion and $26.3 billion with same store sales increasing three to four percent over Fiscal 2014. Capital expenditures are anticipated to be about $525 million.
Rite Aid stock is down almost 15 percent in the premarket this morning, indicating investors are concerned over future prospects with the company's guidance being the catalyst for the selloff. Rite Aid stock is trading off of its yearly high of $8.62 made in early June but was still up +72 percent for the year as of yesterday's close.
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