Rite Aid Issues Profit Warning

CAMP HILL, Pa. - Rite Aid Corp., the third-largest U.S. drug store chain, based here, warned yesterday that its fiscal 2005 results would fall below expectations if current sales trends continue. Initially its shares tumbled 10 percent following the announcement, but they closed yesterday at $3.42, a 6.04 percent drop from the day before.

The warning came as Rite Aid reported a 1.3 percent decline in November sales at stores open at least a year. Total drug store sales fell 1.6 percent to $1.56 billion.

Rite Aid attributed a 1.0 percent drop in pharmacy same-store sales to a weaker flu season. Meanwhile same-store sales from its general merchandise segment -- which includes foods, snacks, and photofinishing -- fell 1.9 percent.

The company's chief executive, Mary Sammons, said sales continue to be negatively affected by the United Auto Workers mandatory mail prescription program and tougher year-over-year comparisons.

Rite Aid said if this sales trend continued, its sales and income for fiscal 2005, ending in February, would fall below the low end of the forecast ranges given Sept. 23, which were between $16.9 billion and $17 billion for sales, and between $122 million and $150 million for earnings.

CVS Corp., the No. 2 U.S. drug store chain, reported yesterday a 3.1 percent rise in same-store sales in November. Walgreen Co., the top U.S. drug store chain, last week posted an 11.4 percent rise in same-store sales in November.
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