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Rite Aid Foundation announces $1.7 million in donations for 2007

BY Michael Johnsen

CAMP HILL, Pa. The Rite Aid Foundation, a private foundation managed by Rite Aid, on Wednesday announced that in the past year it has awarded approximately $1.7 million in donations to non-profit organizations across the United States for programs focusing on health and wellness in communities that Rite Aid serves.

“Being caring neighbors who are involved in our communities in meaningful ways is one of Rite Aid’s core values,” stated Gayle Rife, manager of the Rite Aid Foundation. “We are pleased to have the opportunity to join with local charities to improve the lives of people in our neighborhoods through programs that help to build stronger families and stronger communities.”

Over the course of 2007 more than 170 charities in more than 140 communities were provided grants by the Rite Aid Foundation. Among them are low-cost and free prescriptions for uninsured low-income people, providing refurbished hearing aids to people who could not otherwise afford them, educational and counseling programs to help prevent child abuse, low-cost medical services in medically underserved areas, programs to help teach children ways to manage and control asthma and diabetes, counseling services for children who are victims of domestic violence, parenting classes, and skills training for abused or neglected youth.

Since 2001, the Rite Aid Foundation has awarded grants totaling more than $6.3 million to more than 370 organizations in 230 communities.

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No cause for overreaction to Rite Aid news, analyst says

BY Michael Johnsen

NEW YORK The waters might be choppy, but Rite Aid still stands a strong chance of successfully turning around its recently-acquired Brooks/Eckerd operations, Meredith Adler, research analyst for Lehman Brothers, expressed in a note published Friday.

The note comes one day after Rite Aid lowered its fiscal 2008 guidance for sales, net loss and adjusted EBITDA because of a soft economy and slow start to the cough/cold season according to the company. That news dropped Rite Aid’s stock by some 27 percent to less than $3 per share.

“We remain confident in the medium- and long-term outlooks for Rite Aid and the benefits of the Brooks/Eckerd merger … although we expect near term sales pressure to persist into 4Q,” Adler wrote.

“The conversion of the acquired stores’ front end to Rite Aid’s more successful approach is going smoothly from a process perspective,” she said. “It is, however, creating more pressure on earnings than expected.” Sales at the acquired stores have never been high, and the temporary distruption in stores on account of systems conversions and remodels, not mention Rite Aid’s discontinuation of certain inventory and unprofitable promotions, and sales have eroded even further, Adler said. “It is our view that Rite Aid essentially bought the Brooks/Eckerd pharmacy business with the intention—well underway now—to replace the acquired front ends with its more successful offering, merchandising plan and prototype layout. The first initiative is complete for all stores but the latter two have only just begun. … That means that the company will need to live with the sales and earnings weakness at the acquired stores for a few more quarters, though steady improvement should occur by the beginning of the new calendar year.”

Over the course of the third quarter, Rite Aid completed systems conversions at an additional 265 stores after having completed 300 by the end of its second quarter.

Rite Aid had changed all the merchandise at every store by the end of November, which includes the company’s private label offerings. And Rite Aid has completed minor remodels and remerchandised 150 stores, Adler reported, and consolidated 78 stores, transferring the prescription files of 71 acquired Brooks/Eckerd stores to nearby Rite Aid stores and transferring the prescription files of seven Rite Aid stores to nearby acquired stores.

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Beth Kaplan tapped to head up GNC

BY Michael Johnsen

PITTSBURGH GNC named Beth Kaplan, one-time Rite Aid senior executive vice president, its president, chief merchandising and marketing officer. Kaplan was one of the original engineers of the relationship between Rite Aid and GNC.

Kaplan will report directly to chief executive officer Joe Fortunato.

“As president, chief merchandising and marketing officer, Beth will focus on key strategic initiatives relating to the merchandising of our stores, marketing of the GNC Brand and product development,” Fortunato stated. “Beth’s enormous depth of experience in merchandising and marketing will help GNC to further build on its strong financial performance to date.”

“This is a great time to join GNC,” Kaplan said. “Joe Fortunato and his senior management team have done a wonderful job expanding GNC’s franchise as the largest global specialty retailer of nutritional supplements. Moving forward, my focus will be on brand-building initiatives that broaden our relationship with our customers, particularly women, while expanding our product offerings.”

Her relationship with GNC and its product strategy goes back to her tenure, in the late 1990s, as senior executive vice president, marketing and merchandising for Rite Aid, where she was responsible for overall corporate marketing and merchandising. In that role, she developed and negotiated Rite Aid’s strategic alliance with GNC, which is forecasted to grow to 2,500 GNC stores within Rite Aid stores.

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