On the Line: Rite Aid CEO Mary Sammons
Web Editor, "Mad Money"
Rite Aid expected a profit loss would come with the integration of its recent Eckerd and Brooke purchases. But CEO Mary Sammons had to admit she was disappointed when the drug store’s third quarter came in worse than expected.
“What we weren’t able to forecast is that sales would become more difficult because of the consumer environment and a weaker cough, cold and flu,” Sammons told Cramer Thursday on Mad Money. Poor sales of cold remedies have cut into Rite Aid’s revenues.
Despite the Street’s reaction – the stock closed down almost 32% – Sammons urged investors to trust Rite Aid’s long-term strategy. The value for shareholders, she said, will come once the over 1,850 Brooks and Eckerd stores are fully integrated by next fall.
Sammons, who also serves and chairman and president, denied Rite Aid cut its capital expenditures and the talk that the company might not be able to pay the interest on its debt. Sales should increase as the integration continues, she said, and Rite Aid has a $1.7 billion revolving credit facility that has “virtually no restrictions on it.”
“We’re not worried,” Sammons said. “We’re in great position to execute our plan.”
When Cramer asked why investors should stick with Rite Aid, Sammons reiterated her faith that the Brooke and Eckerd deal will pay off in the end.
“Just have confidence that we are there for the long term,” she said. “It’s just not a quarter-by-quarter story. I think you’ll be excited by what you see happen as we get through this.”
Cramer said he usually likes to see a positive quarter before he'll recommend a stock again. For now, though, he's leaving this pick up to investors.
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