UPDATE 4-Rite Aid posts Q4 loss; sees challenging 2009

jueves 10 de abril de 2008 21:05 CEST
 

(Adds Goldman Sachs analyst's comments in paragraph 21; updates share movement)

By Varsha Tickoo

BANGALORE, April 10 (Reuters) - Rite Aid Corp (RAD.N: Cotización), the third-largest U.S. drugstore chain, posted a quarterly loss on a big tax charge, and forecast a tough 2009 as it struggles to revamp its business in the face of stiff competition from larger rivals.

Excluding the charge and other items, the fourth-quarter loss was narrower than market estimates -- a respite for Rite Aid that has lately been plagued by sluggish holiday sales, a weak flu season and cheap generic drugs cutting into sales.

Rite Aid operates more than 5,000 stores that fill prescriptions, which account for nearly two-thirds of sales, and sell health and beauty aids, convenience foods and greeting cards, among other items.

Rite Aid, whose market value has dropped by 57 percent over the past year, did not have sound business strategies compared with larger rivals Walgreen Co WAG.N and CVS Caremark (CVS.N: Cotización), Raymond James analyst John Ransom said.

"You've got PBMs (pharmacy benefits managers) pushing mail-order and you've got Wal-Mart (WMT.N: Cotización) making a reinvigorated push into the prescription market," Ransom said.

As rivals try to lure more customers by making it easier for them to buy and receive products, Rite Aid needs to especially ramp up its mail-order operations, Ransom said.

"They need to shrink the company, they need to probably sell off 1,000 to 1,500 stores in markets where they don't compete... and retreat back to a footprint they can defend," the analyst said.   Continuación...