Rite Aid Corp. (NYSE:RAD), the third-largest U.S. drugstore chain, fell in premarket trading on Thursday after lowering its full-year earnings guidance even as it reported a turnaround to profit for the third consecutive quarter.
The shares dropped 3.2 percent to $3.11 at 8:38 a.m. in New York on Thursday.
Full-year earnings for 2014 is expected to be in the range of a penny a share and 16 cents a share, the Camp Hill, Pennsylvania-based company said in a statement on Thursday. This compared with an earlier guidance of 4 cents to 20 cents a share.
The company on Thursday cited an anticipated charge from Rite Aid’s recently announced refinancing transactions. Six analysts on average were predicting a profit of 17 cents a share.
Rite Aid reaffirmed, in the meantime, its forecast for 2014 sales and same-store sales. Full-year sales are predicted to be between $24.9 billion and $25.3 billion, while same-store sales are expected to range from a decrease of 0.75 percent to an increase of 0.75 percent.
Rite Aid said it swung to profit in the first quarter, for the third quarter in a row, helped by sales of higher-margin generic drugs.
Net income for the 13 weeks ended June 1 was $89.7 million, or 9 cents a share, compared with a net loss of $28 million, or 3 cents a share, a year earlier. This matched the average estimate of four analysts.
“We kicked off our new fiscal year by posting strong first-quarter results that reflect our continued operational and financial progress,” Chief Executive Officer John Standley said in the statement.
Revenue dropped 2.7 percent to $6.29 billion, above the $6.27 predicted by four analysts on average. The company attributed the sales drop to selling more generic drugs, which are cheaper but more profitable, and as it closed stores.
Same-store sales, a key growth metric for retailers that measures sales at stores open longer than a year, decreased 2.5 percent in the first quarter.
During the quarter, Rite Aid remodeled 108 stores, bringing the total number of wellness stores chain-wide to 905. The company closed 8 stores, resulting in a total store count of 4,615 at the end of the quarter.
The shares more than doubled since the beginning of the year, giving the company a market value of $2.82 billion. They closed at $3.11 on Wednesday.