New York, NY, United States (4E) – Rite Aid Corp. unexpectedly posted a profit for its fiscal second quarter, driven by rising sales growth and high margins.
Net income was $30.03mn, or $0.03 a share, compared to the last year’s loss of $41.4mn, or $0.05 a share. Thursday’s results included a per-share charge of $0.07 from a loss on debt retirement, though this was partially offset by a recovery of $0.02 per share linked to the settlement of an antitrust case over prescription drug.
The increase in profit means Rite Aid is at its fourth straight quarter in the black after years of losses following its 2007 acquisition of Brooks and Eckherd that resulted to accumulation of huge debt for the company.
The company reported increase in revenues to $6.278bn from $6.231bn in the year-ago period. Analysts forecast $6.27bn in revenues. The growth in revenues was boosted by the 1 percent rise in same store sales, though this was partly offset by store closings.
The improvement in same-store sales figures included a 1.7 percent rise in pharmacy sales, but it was partially offset by poor front-end sales that fell 0.3 percent.
With regard to the introduction of new drugs in market, the results have been mixed so far for Rite Aid and the healthcare sector in general. While generic drugs have higher margins compared to branded ones, they can also hit sales because they are sold in lower prices. Rite Aid’s gross margin improved from 27.5 percent to 28.9 percent in the latest quarter.