Rite aid to delay financial reports

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Rite Aid To Delay Financial Reports

19:35EST

01/11/00

CAMP HILL, Pa. (AP) -- Rite Aid Corp. said Tuesday it would delay release of several scheduled financial reports until July, as the company seeks to regroup from a year of accounting questions and a new management team.

The nation's third largest pharmacy chain said it had reached agreement with its lenders on the delay and planned to seek extensions on Securities and Exchange Commission filings for the remaining quarterly and annual reports for fiscal year 2000.

Rite Aid's third quarter report for the period ending Nov. 27 was due Tuesday. "We believe it's a responsible action to take,'' said vice president Karen Rugen. "We've had a new management team for a month, we've had new auditors for just a few weeks, and with all the delays with the reaudit of '97, '98 and '99, we realized we didn't have enough time.''

The company has been trying to recover after financial woes sent the company's stock tumbling by more than 80 percent in a year. Former top executive Martin L. Grass was ousted in October, and a new team led by CEO Robert Miller has pledged to improve profitability with stricter financial controls and strategic marketing.

Rite Aid also has switched auditing firms and a restatement of its earnings for the past three years was expected to result in a $500 million reduction.

Still, Rite Aid's move Tuesday was met with some skepticism by analysts.

"The move tells me that the problems run pretty deep and that there is no easy solution to remedying the problems with Rite Aid's former internal accounting methodologies,'' said Steven Valiquette of Warburg Dillon Read.

"It takes the wind out of their sails in the short term, to the extent the company had some momentum after announcement of its new management team,'' he said.

John Ransom of Raymond James & Associates agreed, citing figures on Rite Aid's same-store sales released Tuesday showing a 5.9 percent increase, a poor performance compared to the double-digit growth of Walgreen's and CVS, he said. Same-store comparisons measure sales growth excluding the impact of newly opened stores.

"I think the double whammy of weak December sales and a likely black hole of information doesn't help,'' he said. "I doubt any investors are betting on a quick and easy turnaround.''

Rite Aid's announcement came late Tuesday, after the close of markets. Rite Aid's shares were trading at $10.62{, down 1 percent from Wednesday.

-- Homer Beanfang (Bats@inbellfry.com), January 12, 2000

Answers

welcome to 2000!!! sorry to see it. this is exactly what many of us feared is going to happen. this certainly corroborates all those earlier posts that were made fun of regarding rite aid stores having problems with their machines, etc. thanks for the post, homer. i will cross post it to hyatt's bb.

-- tt (cuddluppy@aol.com), January 12, 2000.

Rite Aid is a poorly managed company that has been headed for Chapter 11 for 2 years. They are delaying their financial report until they file so they can position the company ofr the best deal possible in bankruptcy. What does this have to do with Y2K?

Jim

-- Jim Cooke (JJCooke@yahoo.com), January 12, 2000.


Probably no connection to Y2K, but no harm in continued scrutiny. Companies that have weak management are more likely to be unprepared for Y2K.

-- Dave (dannco@hotmail.com), January 12, 2000.

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