It shouldn't have been much of a surprise that Rite Aid (NYSE:RAD) turned in strong quarterly results yesterday and raised its guidance for the rest of the year. And it wasn't; the stock price pretty much matched the market, dropping about 3%. What's interesting is why the nation's No. 3 drugstore chain has doubled its value in the past five months after four horrible years.

Thanks to a huge accounting scandal, Rite Aid plunged from about $50 a share in 1999 to $1.81 in 2000. But cleaning things up on the corporate front was not going to be the hard part. The store experience was downright rotten at times for customers, and that was due in large part to the fact the employee experience was rotten.

As CEO Mary Sammons told The Washington Post's Margaret Webb Pressler, "We had a really disenfranchised group of associates that no one had been listening to, and no one had been heeding the things they heard every day that were creating problems for the customer." Sammons changed that "culture of fear" and the result, says Raymond James analyst John Ransom, is "probably the great untold American retail turnaround story."

Thus, when asked during yesterday's conference call about Rite Aid's low rating in a recent Consumer Reports survey of drugstores, Sammons spoke up. "None of the drug stores fared too well," she said in a transcript provided by CCBN StreetEvents (registration required). "It's also old data and the survey was completed in April 2002, and it was also one of the areas that we have focused on extraordinarily hard with our people and, if anything, we've been getting very positive customer feedback and several other, much more positive articles, too."

Looking at customer comments, she says, "Our satisfaction has gone up and we're going to continue to focus on it because we think it's a key priority."

There are still other issues to tackle (such as the company's huge debt load), but at least it started its turnaround in the most important place: at the store level.