Rite Aid Corp.'s shares rose 44 cents to close at $3.44 after the company, based in Camp Hill, Pa., reported a smaller-than-expected loss in the third quarter.

Rite Aid, which has been struggling after news of accounting irregularities and a related investigation by the Securities and Exchange Commission, said its loss from continuing operations for the quarter that ended Nov. 25 was $241.2 million, or 74 cents per share.

That compared with a loss from continuing operations of $249.8 million, or $1 a share, for the same period a year ago.

Rite Aid, the country's third-largest drugstore company, said prescription revenue grew 11 percent in the third quarter, while sales of other items rose 8.4 percent.

The net loss for the quarter, after a $135.5 million reduction in a previously recorded loss on the sale of its PCS Health Systems subsidiary, was $105.7 million, or 34 cents a share.

Wall Street analysts expected a loss of about 46 cents a share, according to First Call/Thomson Financial, which tracks earnings data.

Steve Hahn, an analyst with Morningstar Inc., a Chicago research company, said he was pleased to see Rite Aid's cash flow improving. Excluding certain one-time gains, Rite Aid's earnings before interest, taxes, depreciation amortization and nonrecurring expenses rose 53.4 percent, the drugstore company said.

The increasing cash flow gives Rite Aid a better chance of surviving in 2002, when it must begin making interest payments on debt it has refinanced.

In the third quarter, Rite Aid closed 25 stores and relocated 14 others. With more than 3,700 store locations in 30 states, the company plans to close an additional 75 underperforming stores in the next year to cut costs. Rite Aid did not disclose the locations of the stores.

Contributing to the company's losses were non-cash charges of $110.4 million, including $67.1 million for store closings, and $14.8 million from debt restructuring and losses from its investment in Drugstore.com, an online drug retailer.

The company also reported that it had reduced debt by $580.8 million in the third quarter, primarily from its $1 billion sale of PCS as well as an exchange of $92.2 million of debt for equity. Rite Aid's debt is now about $4.9 billion, plus $1.1 billion in capital leases, a spokeswoman said.

Rite Aid's troubles and accounting problems sent the company's stock tumbling by more than 80 percent, or $10 billion, last year.

In July, accounting irregularities forced the company to revise its earnings downward by $1 billion for fiscal 1998 and 1999. Rite Aid continues to be investigated by the SEC and the U.S. Attorney's Office for possible wrongdoing.

The Inquirer

-- Anonymous, January 12, 2001