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What happened
Actions of Rite Aid Corporation (NYSE: RAD) had dropped 12% at 3:32 pm EDT on Monday. The decline appears to be a continuation of the sale that began last week, after the pharmacy retailer announced disappointing fourth quarter results.
So what
Rite Aid does not have much to like for investors at the present time. The company missed analysts' expectations for fourth-quarter earnings and earnings. And Rite Aid has provided revenue forecasts for the 2020 fiscal year lower than Wall Street's consensus estimate.
Source of the image: Getty Images.
Today's decline could be a buying opportunity if there were good reasons to believe that Rite Aid was about to change things. Unfortunately, this does not seem to be the case.
At the company's Q4 teleconference, John Standley, CEO of Rite Aid, said the pharmaceutical retailer had three top priorities. First, he said that Rite Aid will "leverage and more clearly align our unique capabilities," including the expertise of its pharmacists "to help payers provide a higher level of care to patients." Standley said the company's second priority is to "rethink our front-end offering", specifically to the optimization of the products and services it offers. Rite Aid's third priority is to implement new processes and procedures to control costs more efficiently and optimize operational efficiency.
The problem with these strategic priorities, however, is that it is difficult to determine how much they will actually improve Rite Aid's bottom line. With the company's disappointing revenue forecast, it is unlikely that its strategy will satisfy investors any time soon.
Now what
An important development for Rite Aid is imminent: the company plans to split its shares on April 22, according to a ratio of 1 to 20. This maneuver is to ensure that Rite Aid meets the requirements of the new York Stock Exchange.
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