S&P: Rite Aid view negative

Standard & Poor's said it revised the outlook on Rite Aid Corp. to negative from stable and affirmed the B corporate credit rating.

The issuer has BB- ratings for its $500 mil 7½% notes due 2017, $200 million 7½% senior secured notes due 2015, $1.1 billion secured bank loan due 2014 and $360 million 8 1/8% senior secured notes due 2010. Rite Aid has a CCC+ senior unsecured rating and CCC preferred stock rating.

According to S&P, the outlook change reflects the company's weak same-store sales and expectation that this trend will continue over the next few quarters due to a more cautious consumer, strong growth of lower priced generics and intense competition. The current environment also could make it more challenging for the company to integrate its recently acquired Eckerd stores, the agency added.

Ratings reflect the challenges Rite Aid faces in both integrating 1,800 acquired stores and improving overall operations amid intense industry competition as well as significant debt burden and thin cash flow protection, S&P said.

The issuer's pro forma total debt-to-EBITDA ratio is expected to exceed 8.1 times in fiscal 2008, up from 7.2 times at year-end March 3, 2007.

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