Rite Aid profit surges in fourth quarter on huge tax benefit | VailDaily.com

Rite Aid profit surges in fourth quarter on huge tax benefit

HARRISBURG, Pa. – Rite Aid Corp.’s earnings soared in the fourth quarter on the strength of a huge income tax benefit and improving pharmacy sales, the nation’s third largest drugstore chain reported Thursday.Without the tax benefit, the company’s profit missed Wall Street expectations.Rite Aid earned $1.25 billion, or $1.83 a share, for the three months ended March 4, up from $223 million, or 35 cents a share, a year ago.Revenue rose 10 percent to $4.77 billion from $4.34 billion a year ago. Sales in stores that were open at least a year rose 2.5 percent, it said.The latest results included a tax benefit of $1.23 billion, or $1.82 per share, and $20 million, or a penny per share, that had been set aside pending a federal investigation into the activities of the company’s prior management that closed without a fine.Excluding the items, the company earned $5.3 million, or breakeven per share. Before one-time items, analysts surveyed by Thomson Financial expected a profit of 2 cents a share.The company’s shares rose 4 cents to $4.05 in late trading on the New York Stock Exchange.”We are pleased with the improvements in our business during the fourth quarter, including a return to positive increases in pharmacy same store sales despite a milder cough, cold and flu season than last year,” Mary Sammons, Rite Aid’s president and chief executive, said in a statement.Sammons also said the company saw an increase in prescriptions filled for seniors as pharmacies introduced Medicare’s drug benefit.Although Sammons told analysts that the results “are not as strong as we had hoped,” analysts were upbeat about the company’s future results.A Goldman Sachs report said Rite Aid’s cash flow should improve, pointing to a 5 percent increase in March prescription sales in stores open for at least a year and an expected boom in generics reaching store shelves. UBS Securities analysts said in a report that they like the investments Rite Aid is making in its employees, real estate development and Medicare marketing.”We think these are good investments for the long-term,” the analysts wrote.For the year, Rite Aid earned $1.28 billion, or $1.89 per share, on revenues of $17.3 billion. That compares to a profit of $299.8 million, or 47 cents a share, after preferred dividend costs, on revenues of $16.8 billion last year.In fiscal 2007, the company said it expected revenue of $17.35 billion to $17.6 billion.In the quarter, the company opened seven new stores, acquired one store, remodeled 10, relocated 33 and closed 18. Stores in operation at the end of the quarter totaled 3,323.—On the Net:Rite Aid: http://www.riteaid.com

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