Drugstore chain Rite Aid Corp. shook up its management team and increased the estimate of its fiscal-year loss for the second time in three months, citing the weak economy and slowing trends in prescription sales.Rite Aid, of Camp Hill, Pa., said its loss for the second quarter to $222 million, or 27 cents a share, from $69.6 million, or 10 cents a share, in the same quarter. Sales decreased by nearly $7 billion.
The retailer said it expects to post a loss of $500 million for its current fiscal years
Rite Aid labors under a large debt overhang, related to its nearly $4 billion acquisition last year of the Brooks and Eckerd drugstore chains. The purchase was aimed at competing with larger rivals Walgreen Co. and CVS Caremark Corp. Rite Aid reported $5.98 billion in long-term debt.
During a conference call with analysts Thursday, Rite Aid executives vowed to reduce capital spending by about $50 million and cut costs during the second half of the fiscal year. "The growing uncertainty of this economy and the reluctance of customers to spend their dollars dictate that we tighten our belt further," Chairman and Chief Executive Mary Sammons said.
One factor working in Rite Aid's favor is that the company completed a refinancing of about $700 million of debt in July, before the credit markets seized up. The chain has no significant debt maturities until 2013. The company named John T. Standley its president and chief operating officer. Mr. Standley, 45 years old, was chief executive of grocery chain Pathmark Stores Inc. from 2005 to 2007. He worked at Rite Aid from 1999 to 2005. Ms. Sammons, the chief executive and chairman, also previously held the title of president.
The chain named Frank G. Vitrano, 53 years old, to the combined role of chief financial officer and chief administrative officer. Mr. Vitrano spent 35 years at Pathmark.
Rite Aid said its former chief operating officer, Robert J. Easley, 49; its former chief financial officer, Kevin Twomey, 58; and its former chief administrative officer, Pierre Legault, 48, are leaving the company "to pursue other interests."
