A $1.72 billion tax break and strong sales from established stores helped earnings for the drugstore chain Rite Aid soar in the fiscal fourth quarter.
The Camp Hill, Pennsylvania, company said Wednesday that a "last-in-first-out," or LIFO, inventory credit of $23.5 million also boosted pre-tax income in the quarter. That compares to a $44.1 million LIFO charge in the previous year's quarter.
LIFO is an accounting method for inventory that assumes a company sells its newest inventory first, and takes a credit or charge according to anticipated inflation.
Overall, Rite Aid earned $1.84 billion, or $1.79 per share, in the quarter that ended Feb. 28. That compares to net income of $55.4 million, or 6 cents per share, in the previous year's quarter.
Earnings, adjusted for one-time gains, came to 12 cents per share, which topped Wall Street expectations.
The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 7 cents per share.
The drugstore chain's revenue rose about 4 percent to $6.85 billion in the period, which surpassed average Street forecasts for $6.75 billion.
Rite Aid said its income tax benefit came largely from the reduction of a deferred tax asset valuation allowance.
The drugstore chain's revenue from established stores also climbed 4.5 percent compared to the previous year's quarter. This was led by pharmacy sales growth. That is an important metric for retailers because it excludes the impact of recently opened or closed stores.
For the year, Rite Aid reported a profit of $2.11 billion, or $2.08 per share, on $26.53 billion in revenue.
The company expects full-year earnings for the new fiscal year to be 19 cents to 27 cents per share, with revenue in the range of $26.9 billion to $27.4 billion. Analysts expect, on average, revenue of $27.97 billion, according to FactSet.
The nation's third-largest drugstore chain ran 4,570 stores at the end of the quarter.
Rite Aid shares rose 24 cents, or 2.7 percent, to $8.93 in morning trading Wednesday. The stock, which had slipped below $1 in late 2012, had already advanced more than 15 percent so far this year.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on RAD at http://www.zacks.com/ap/RAD
Keywords: Rite Aid, Earnings Report