Rite Aid says liquidity at $1.04 billion after debt cuts, refinancing

By Jennifer Lanning Drey

Savannah, Ga., Sept. 23 - Rite Aid Corp. currently has $1.037 billion of liquidity after reducing debt and refinancing its revolving credit facility and tranche 4 term loan during the second quarter of fiscal 2011, Frank Vitrano, the company's chief financial officer, reported Thursday during its quarterly earnings conference call.

At the Aug. 28 end of the quarter, Rite Aid's total debt net of invested cash was $158 million lower than at the end of the second quarter of fiscal 2010. The figure was $220 million lower versus the fourth quarter of fiscal 2010.

During the second quarter, the company repurchased $93.8 million of its 8.5% convertible notes due 2015, according to its earnings release.

Rite Aid's liquidity benefited during the second quarter from working capital initiatives and disciplined capital spending, Vitrano said.

"Our financial position has improved, with strong liquidity, lower interest expense, extended debt maturities and our ability to continue to reduce debt while at the same time making good investments for future growth," John Standley, Rite Aid's chief executive officer, said during the call.

The CEO also noted that it was a busy quarter for the company as it made progress in its key initiatives while improving the balance sheet.

Revenues drop with fewer stores

Rite Aid's revenues for the second quarter were $6.2 billion, down from $6.3 billion in the prior-year second quarter. The decrease was primarily due to a reduction in total store count as well as a decline in same-store sales, Vitrano said.

On a year-over-year basis, the company had 65 fewer stores in the second quarter of 2011, he said.

Same-store sales for the quarter decreased by 1.5% versus the second quarter of 2010.

Second-quarter adjusted EBITDA was $181.2 million, down from adjusted EBTIDA of $216.5 million for the same period of 2010.

The figure was negatively impacted by advertising expenses related to the company's customer loyalty program, expense related to the expansion of its immunization capabilities, and the shift of Memorial Day holiday pay from the first quarter in 2010 into the second quarter of this year, Standley said.

Despite the decrease in adjusted EBITDA, sales in Rite Aid's core drugstore categories have started to strengthen and gross margin trends are showing improvement, he said.

Rite Aid continued to reduce operating expenses during the quarter and believes there are opportunities to further reduce operating costs throughout the company, he said.

The company expects to be free cash flow positive for the year, Vitrano said.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.