Retailer shakes up board
CAMP HILL, Pa. – Rite Aid Corp. on Thursday posted second-quarter earnings that were in line with Wall Street’s expectations.
The company also named three new board members and announced it was dividing the chairman and chief executive officer position. Director Bruce Bodaken will become chairman while John Standley remains CEO. The moves follow the chain’s failed merger with Albertsons Cos.
“These changes will significantly strengthen and enhance the board’s governance oversight and reflect our commitment to aligning Rite Aid’s interests with those of stockholders,” said Bodaken. “Since terminating the transaction with Albertsons, we have engaged directly with many of our largest stockholders. Based on the valuable insight and input we have received, we are accelerating our effort to refresh the board.”
Rite Aid’s Adjusted EBITDA from continuing operations for the quarter ended Sept. 1 was $148.6 million, or 2.7% of revenues. The chain had a net loss from continuing operations of $352.3 million, or 33 cents per share. The adjusted net loss was $7.9 million, or 1 cent per share. Revenues from continuing operations were $5.4 billion, up from $5.3 billion in the year-ago period and slightly surpassing Wall Street’s expectations.
“During the quarter, we have been hard at work accelerating our stand-alone strategy to capitalize on key opportunities to grow our business,” said Standley. “These efforts helped us drive significant improvement in front-end and pharmacy comparable stores sales and exceed our plans for script count growth. With our trusted brand of health and wellness, highly popular customer loyalty program, innovative Wellness format and expanding offering of health and wellness services, we have a strong foundation for growth.”
“While we have important work ahead of us, we also have full confidence in our strategy, our team and our company to succeed in building significant momentum for the future as we continue to work to meet the evolving needs of our customers and create value for our shareholders,” he added.
The chain’s retail pharmacy segment revenues were $3.9 billion, up 0.2% from last year due to an increase in same-store sales, partially offset by a reduction in store count. Revenues in the pharmacy services segment were $1.6 billion, an increase of 4.6%, which was due to an increase in Medicare Part D membership.
Same-store sales from retail pharmacy continuing operations for the quarter increased 1%, the result of a 1.6% increase in pharmacy sales and 0.1% decrease in front-end sales. Pharmacy sales included an approximate 107 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 1.1% . Prescription sales from continuing operations accounted for 66.4% of total drugstore sales.
The three new independent directors — Robert Knowling, Jr., Louis Miramontes and Arun Nayar — will stand for election at the 2018 annual meeting of stockholders, which is scheduled for Oct. 30. Knowling, Miramontes and Nayar will replace current directors David Jessick, Myrtle Potter and Frank Savage, who will not stand for re-election.
“We are pleased to welcome Bob, Lou and Arun, and believe their fresh perspectives will be significant assets as we continue to oversee the development and implementation of our strategy to best position Rite Aid to create long-term value for stockholders,” said Bodaken. “These changes are the first steps in reinvigorating our corporate governance practices and policies. Over the coming year, the board will continue to seek stockholder input as we identify new candidates to further refresh the board and consider other corporate governance enhancements.”