Rite Aid Reports Wider Losses Back to 1998

Rite Aid Corp. reported far wider losses for the fiscal first-quarter and all of last year and restated its financial results for 1998 and 1999 to reflect losses more than $1 billion greater than originally reported. The nation’s third-largest drugstore chain said its loss from the quarter ended May 27 came in at $238 million, or 92 cents a share, compared with a net loss of $44 million, or 17 cents, for the restated first quarter of the previous fiscal year. Revenue rose 5.6% to $3.8 billion from a restated $3.6 billion. The company lowered results for fiscal 1999 by $566.2 million and results for 1998 by $492.1 million. The restated figures give investors and analysts their first real look at the troubled company’s financial status since Rite Aid said last fall it could no longer provide reliable profit forecasts due to accounting difficulties. Rite Aid said it did not restate fiscal 1997 earnings, as previously announced, because it would “require an unreasonable effort and expense.” The company spent $50 million on the restatements, which took seven months. Chief Executive Robert Miller attributed the problems to the previous management’s expansion program. The Securities and Exchange Commission began a formal investigation of the company in November 1999 after longtime auditor KPMG quit because it said it could no longer rely on management’s representations. The next month, a new management team led by Miller took over and pledged stricter financial controls. Rite Aid released the figures after the markets closed. Rite Aid shares fell $1.75 to close at $6.63 on the NYSE, above its 52-week low of $4.56 but well below its 52-week high of $24.81.