Not Ready for Rite Aid

Drugstore chain Rite Aid (NYSE:RAD) reported increased same-store sales today, though they lagged the heftier gains reported by a heavyweight in the industry, Walgreen (NYSE:WAG). Despite its Samaritan name, it still seems like Rite Aid's the one that needs some help.

Today, Rite Aid reported a 2.4% increase in same-store sales; pharmacy sales were up 1.7% while front-end same-store sales increased 3.5%. Overall sales at Rite Aid increased 2.0% to $1.283 billion.

Earlier this afternoon, though, Fool contributor Steven Mallas explored Walgreen's far sunnier June sales figures, which just made Rite Aid's June look kind of sad, despite the increase. After all, Walgreen posted double-digit same-store sales gains as well as a whopping 15% boost in overall sales. CVS (NYSE:CVS) wasn't exactly hurting when it reported its May sales, either. It's not hard to imagine that Rite Aid could stay in the shadows of these formidable rivals.

Meanwhile, all these retailers also face competition from superstores like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), both of which represent stiff competition that spans much further than just the pharmacy.

Meanwhile, Rite Aid's same-store sales improvements have been becoming less pronounced over recent months. Although Rite Aid shares were recently trading at about $4.95, they're actually trading at 22 times forward earnings. Add to that a hazy outlook on how well the company will be able to compete with its archrivals, especially once CVS has J.C. Penney's (NYSE:JCP) Eckerd, and it seems like a less-than-advantageous time to place a bet on Rite Aid.

Can Rite Aid pull ahead? Talk about the ongoing rivalries within the drugstore industry on the Walgreen discussion board.

Alyce Lomax does not own shares of any of the companies mentioned.