Rite Aid said its quarterly loss narrowed to $116 million, or 14 cents per share, while revenue dwindled 2.7% to $6.3 billion. Same-store sales dipped 1.1%, while gross margin contracted from 27.4% to 26.7%.
While the loss was slimmer than analysts expected (consensus forecasts called for a 16-cent deficit), Rite Aid's outlook for the rest of the fiscal year overshadowed its second-quarter results. The retail chain said it now expects to lose 48 cents to 74 cents per share in 2009, with revenue ranging between $25.7 billion and $26.2 billion. Previously, RAD was projecting a narrower full-year loss of 33 cents to 59 cents per share on revenue of $26.3 billion to $26.7 billion.
Traders were quick to punish the stock, sending Rite Aid shares to a loss of more than 14% at their intraday nadir of $1.67. However, the low-priced security has gained 529% year-to-date, and Thursday's pullback simply brings the stock back in touch with support at its 10-week moving average. This intermediate-term trendline has guided RAD higher since late March.
If short sellers decide to take profits in light of the post-earnings plunge, the effects of short-covering support could also help RAD find a floor. Short interest accounts for 2.63% of the equity's available float, or roughly three times its average daily trading volume.