Rite Aid shares slip at heels of declining comparable sales
NEW YORK Rite Aid’s stock closed at just under $1 for the first time in more than a year on June 30, one day before the chain reported declining comparable sales.
The stock value has been declining slightly ever since, closing at 93 cents on July 1 and 92 cents on July 2. As of mid-day trading on July 6, Rite Aid stock was valued at 91 cents.
“Overall, comps continue to be pressured by the weak consumer, less flu and allergy activity, increased competition — dollar stores, supermarkets, mass merchants, etc. — and Rite Aid’s efforts to improve liquidity, [including] inventory, expense, capex cuts,” wrote Ed Kelly, Credit Suisse research analyst, in a July 1 note.
“Management continues to see the economic environment and competitive environment as challenging, and there continues to be pressure on third-party pharmacy reimbursement rates, and few new generics to help boost margins,” added Bill Dreher, Jr., of Deutsche Bank in a note following Rite Aid’s first-quarter conference call held last month. “In addition, Rite Aid is cycling last year’s H1N1-driven demand.” On the plus side, initiatives like the wellness+ loyalty card and an enhanced private label offering are gaining traction and should help drive traffic over time, Dreher noted.
Rite Aid had dramatically reversed its stock performance from a low of 21 cents on March 5, 2009, and watched it steadily climb until the stock closed above $1 on May 11, 2009. The stock has closed at more than $1 since, a factor that allowed Rite Aid to maintain its listing on NYSE organically. Earlier in 2009, Rite Aid shareholders had approved a reverse-stock plan in an effort to prevent its delisting from NYSE.