Rite Aid Shares Are Getting Smoked

Rite Aid shares were down more than 12% on Thursday after the company cut its fiscal-year outlook due to lower than expected profitability from generic drugs.

Rite Aid said it expects fiscal-year earnings per share of $0.22-$0.33 against previous expectations for $0.30-$0.40.

The company also slashed its fiscal-year revenue outlook to $26-$26.3 billion, down from $26-$26.5 billion, and narrowed its same-store sales view to an increase of 3%-4% from a previous outlook for same-store sales growth of 2.5%-4.5%.

In a statement, Rite Aid Chairman and CEO John Standley, said:

"Heading forward, while we believe that our key initiatives will continue to drive top-line growth, we are revising our guidance based on lower than anticipated pharmacy margin in the second half of Fiscal 2015. As we navigate these headwinds, we will remain focused on growing our business, generating continued operational efficiencies and positioning our associates to deliver a consistently outstanding experience for our customers."

For the second quarter, Rite Aid reported earnings per share of $0.13 on revenue that rose 3.9% over the prior year to $6.5 billion.

Following Rite Aid's announcement, its larger rivals CVS and Walgreen were down about 0.5% and 0.8%, respectively.