Rite Aid Slows Growth, Closes Stores

CAMP HILL, PA-Looking to reduce debt while boosting underperforming stores, Rite Aid Corp. is slowing expansion, while testing new models for metropolitan and low-volume stores, executives said at the company’s fourth-quarter conference call.

The company will open 20 new stores, while relocating 55 units and closing 117 stores, compared with opening 33 new stores, relocating 56 stores, remodeling 70 units, and selling or closing 200 stores last year. Capital expenditures are expected to be approximately $250 million.

“We worked very diligently to shrink the pipeline as far as we can,” said John Standley, president and COO. “Additional stores could fall out over time.”

No sale-leaseback transactions are planned for the year.

“The sales lease back markets has generally been pretty soft,” said Mary Sammons, chairman and CEO.

The new low-volume model changes affect advertising, layout and merchandising, and was tested in the fourth quarter. The concept was tested in Philadelphia last year and an adjusted program now being tried in another, unnamed, market.

For the fourth quarter, the company reported revenues of $6.7 billion, down 1.7% from the prior-year quarter. Same-store sakes decreased 0.1%. The company posted a net loss of $2.3 billion, compared with a loss of $952.2 million the prior year.

For the fiscal year, revenues were $26.3 billion, up 8.1% from the previous year. Same-store sales rose 0.8%. The chain reported a net loss for fiscal 2009 of $2.9 billion, vs. a net loss of $1.1 billion the prior year.

Rite Aid operates more than 4,900 stores in 31 states and the District of Columbia.