Things have gone from bad to worse for investors of the retail drugstore chain Rite Aid. The company posted its fourth-quarter earnings which fell short of expectations. And unfortunately, the 2019 forecasts didn’t give investors much to be hopeful about.
The company lost one cent per share which is better than the anticipated loss of two cents per share. But Rite Aid reported a fourth-quarter loss of $273 million which is a drop from their gain of $767 million a year earlier.
Their total revenue was $5.38 billion instead of the expected $5.56 billion. In 2020, the company expects shares to fall and it expects revenue to fall between $21.5 billion and $21.9 billion.
The problems that lie ahead for Rite Aid
One of the biggest problems Rite Aid faces is that it still lacks a clear corporate strategy. The company recently eliminated 400 full-time positions and the CEO, CFO, and COO all announced their resignations.
This could help appease investors, who had problems with the previous management team. But it’s unclear how a new team of executives will be able to turn the company around.
For one thing, the sector as a whole is underperforming with both CVS and Walgreens posting losses. Walgreens is down 20 percent and CVS is down 18 percent, which makes them the two lowest performing stocks in the S&P.
After attempting and failing to be acquired by Walgreens in 2015, Rite Aid sold several thousand of its stores to the company. Now Walgreens is posting low quarterly earnings and is shutting down many of the stores it acquired from Rite Aid.
In early 2017, Rite Aid was trading at over $8 per share but the shares have lost over 60 percent of their value just in the last year. As of Thursday morning, the stock is sitting at 56 cents per share after hovering under $1 since the beginning of 2019.
Outgoing CEO John Standley released a statement saying that during the fourth quarter the company took “important steps to position Rite Aid for future growth.” In spite of this sentiment, now probably isn’t the time to invest in Rite Aid. The company faces fundamental problems and has shown little evidence that it will solve them.