http://www.morningstar.com/earnings/17745510-rite-aid-corp-rad-q2-2011.aspx

Rite Aid Corp RAD
Q2 2011 Earnings Call Transcript

Transcript Call Date 09/23/2010

Operator: Good morning. My name is Chrystal and I will be your conference operator today. At this time, I would like to welcome everyone to the Rite Aid Second Quarter Fiscal 2011 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

I would now like to turn the conference over to Mr. Matt Schroeder. Please go ahead, sir.

Matt Schroeder - Group VP, Strategy and IR: Thank you, Chrystal, and good morning, everyone. We welcome you to our second quarter conference call. On the call with me are, John Standley, our President and Chief Operating Officer and Frank Vitrano, our Chief Financial and Chief Administrative Officer.

On today's call, John will give an overview of our second quarter results and discuss our business. Frank will discuss the key financial highlights and fiscal 2011 outlook, and then we will take questions.

As we mentioned in our release, we are providing slides related to the material we will be discussing today on our website, www.riteaid.com under the Investor Relations Information tab for 'Conference Calls.' We will not be referring to them directly in our remarks, but hope you will find them helpful as they summarize some of the key points made on the call.

Before we start, I'd like to remind you that today’s conference call includes certain forward-looking statements. These forward-looking statements are made in the context of certain risks and uncertainties that can cause actual results to differ. Also, we will be using a non-GAAP financial measure. The definition of the non-GAAP financial measure along with the reconciliations to the related GAAP measure are described in our press release. I would also encourage you to reference our SEC filings for more detail.

With these remarks, I'd now like to turn it over to John.

John T. Standley - President and CEO: Thanks Matt. It was a very bust quarter for us and I'm very pleased with the progress we're making on our key initiatives as well as improving our balance sheet. Our wellness+ card-based royalty program is going great. Our immunization program is ramping up and we're moving forward with our segmentation-based initiatives. Before I get into the specifics about the initiatives, I have a couple of comments about the second quarter results which Frank will go through in detail in just a few minutes.

As expected, our SG&A increased this quarter because of a shift in the timing of Memorial Day holiday, expenses to roll out wellness+ and the cost to expand our immunization capabilities, which altogether reduced adjusted EBITDA by $26 million.

Comparable store front end sales decline 90 basis points due softness in our seasonal and general merchandise categories but our core drug store categories performed well. September front end same store sales are improving and are expected to be in the range of negative 50 to negative 75 basis points. Script count declined 2.1% in the quarter due to growth of 90-day scripts, maturation of the Rx savings card and cycling some H1N1 benefit in the prior year. Script count improved month-to-month during the quarter and in September is expected to be similar to our August number.

Read our Earnings Call Transcript disclaimer.
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