Rite Aid Begins Earnings Revision
Nov. 02, 1999
HARRISBURG, Pa. (AP) _ Rite Aid Corp. revised financial reports for the first half of its fiscal year as the nation's third-largest drugstore chain disclosed Tuesday that the Securities and Exchange Commission continues to review its accounting practices.
Rite Aid, based in Camp Hill, Pa., shook up the ranks of its management last month, when it alerted investors that it was reviewing its past financial reports. It said at the time it could wind up revising earnings downward by about $500 million before taxes for the three fiscal years that ended Feb. 27.
On Tuesday, it made revisions based on preliminary results of its review and said the SEC was continuing to go over its records. The announcement came two weeks after Martin Grass resigned as chairman and chief executive officer of the debt-burdened company.
Part of the latest revisions improved results that had been reported earlier.
The new figures included an unaudited net loss of $15.4 million, or 6 cents a share, for the second fiscal quarter ended Aug. 28. The figure represented an improvement over the originally reported loss of $67.9 million, or 26 cents a share.
Rite Aid lowered its earnings for the first quarter of the fiscal year to $44.4 million from a previously stated $81 million. The company also reported a revised net loss of $21.6 million for the first half of the previous year, compared with an originally reported loss of $10.4 million.
``Additional adjustments may be identified as the company completes its review, considers any additional SEC comments and prepares amendments to its previously filed periodic reports,'' the company said.
The loss for the second quarter of the current fiscal year reflected costs associated with closing 57 stores, the company said.
Most of the SEC scrutiny focuses on accounting policies surrounding store closings and relocations made by the company, said Steven J. Valiquette, an analyst who tracks Rite Aid for the investment firm Warburg Dillon Read.
Rite Aid has taken an aggressive approach, Valiquette said. For instance, the retailer has recorded leases for stores it is closing as one-time charges when other companies would consider them as ongoing expenses.
``The company was simply too aggressive in its store relocation and expansion program,'' Valiquette said.
Rite Aid, with about 3,800 stores in 30 states and the District of Columbia, has annual revenue of nearly $13 billion. It also owns pharmacy benefits manager PCS Health Systems Inc. and about 22 percent of the online retailer drugstore.com.
In trading Tuesday afternoon on the New York Stock Exchange, Rite Aid was down 18 3/4 cents at $8.75 a share.