The nation's third largest drug store chain pulled in a profit of $9.88 million during the same period last year but the company said stiff competition and rising costs put a dent in earnings even as revenue rose slightly to $4.13 billion from $4.12 a year ago.
Mary Sammons, the company's president and chief executive, said the outlook is improving, however, as sales for the quarter ending Aug. 27 edged up, first quarter sales slide due, in part, to a mandatory mail-order drug policy implemented by the United Auto Workers' Union.
"The good news is that pharmacy sales are improving," Sammons said during a conference call with investors and analysts Thursday. "Our sales are trending in the right direction."
Sales at stores open at least a year rose 0.5% in the quarter, despite a 0.8% drop in pharmacy sales, with general merchandise sales increasing 3% during the period.
September sales showed continued improvement, Sammons said, with a positive increase in both pharmacy and front-end sales, which she said were helped by a sharpened marketing approach.
The Camp Hill-PA company, which was at the brink of bankruptcy following a massive accounting scandal in the late 1990s, also reaffirmed its full-year profit focus ranging from a loss of 1-cent per-share to a 4-cents-per-share profit. That news sent Rite Aid's stock up 12% by the close of business Thursday.
The company, which operates 3,345 stores throughout most of the country, said it was forced to close 24 stores in the Gulf states due to Hurricane Katrina but noted that it is on target to complete an additional 203 stores this year.
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