Rite Aid Corp. (NYSE: RAD) have been plunging over 8% in early trading after the company announced this morning it swung to a fourth quarter loss. The slump also came after the retailer issued a disappointing 2009 fiscal year guidance.Rite Aid posted a loss of $960.4 million, or $1.20 a share, compared with a profit of $7.1 million, or a penny a share, in the same period a year ago. The company's quarterly numbers were hurt by a income tax charge and other costs connected to its acquisition of more than 1,800 stores last year.
Included in the company's earnings numbers were $894.9 million related to a non-cash income tax charge. Excluding that, Rite Aid's quarterly loss would have come at $65.5 million, or 8 cents a share. Analysts' forecast (which typically exclude one time items) was for a loss of 7 cents a share in the quarter, according to Thomson Financial.
Rite Aid blamed challenging market conditions that put a curb on retail sales. Continued recession fears offset the company's attempt to improve trends, resulting in lower same-store sales compared with those of competitors, Rite Aid stated.
However, the company's acquisition of the Brooks and Eckerd stores gave it a boost in sales. Fourth-quarter revenue surged 50% to $6.82 billion, up from $4.53 billion a year earlier. Analysts, on average, were waiting for a higher revenue of $6.87 billion.
Looking ahead, the retailer expects to see the difficult environment continuing throughout 2008. From this point of view, Rite Aid anticipates to lose money in 2009 for a third straight year. The company now expects a 2009 loss in a range between $260 million and $375 million, or 34 cents to 48 cents per share, with revenue between $26.7 billion and $27.2 billion. Analysts, on average, anticipated a loss of "only" 18 cents per share on higher revenue of $27.6 billion.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
Disney Starts Off the New Fiscal Year with Solid Results
Before the Bell: Futures Higher on Greece Rescue Hopes
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
