Shares of Rite Aid (RAD -2.16%) fell 20% Thursday after the drugstore chain cut its full-year financial outlook.
Coronavirus-related social distancing measures have weighed on Rite Aid's revenue and profits. "During the fourth quarter our industry was impacted by a historically soft cough, cold, and flu season, as well as the continued impacts of COVID on the deferral of elective procedures and related acute prescription volume," CEO Heyward Donigan said in a press release.
Rite Aid's same-store sales declined roughly 5.6% in the fourth quarter, driven by a 37% plunge in cough, cold, and flu-related products. The sharp decline in these typically higher-margin sales, combined with higher COVID-related costs, dented the drugstore company's profitability.
Rite Aid now expects to generate a net loss of as much as $100 million in fiscal 2021. Management also cut its forecast for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to between $425 million and $435 million, down from a prior estimate of $490 million to $520 million.
Donigan said prescription volume has returned to positive levels in March. Rite Aid is also administering COVID-19 vaccines in more than 1,800 of its locations, which should help to boost in-store traffic.
Investors can expect to receive an update on Rite Aid's turnaround progress when it reports its fourth-quarter results on April 15.