CEO will doctor ailing Rite Aid
Chain's troubles traced to '96 acquisition
HARRISBURG, Pa.-- Rite Aid Corp.'s new chairman and chief executive officer will offer a refreshing change to the ailing drugstore chain as it seeks to recover from a year of financial troubles, analysts said Monday.
The nation's third-largest pharmacy chain tapped Robert G. Miller, 55, to serve as its new leader Monday. Miller, who previously held top positions at The Kroger Co. and Oregon-based Fred Meyer Inc., will bring three former Fred Meyer executives with him.
The news sent Rite Aid's stock soaring more than 40 percent on the New York Stock Exchange, with trading at $11.75 late Monday afternoon. The company's stock has more than doubled in value from its low of $4.50 Nov. 11.
It's a huge positive for Rite Aid to bring in such a good group of individuals, said Eric Bosshard, an analyst at Cleveland-based Midwest Research. He and the new management team enjoy a very strong reputation.
Miller, who resigned Friday as Kroger's vice chairman and chief operating officer, previously was Fred Meyer's CEO. There, he helped make it the nation's fifth largest food and drug retail chain before Kroger bought the chain for $13.5 billion in May.
Miller also has held a number of senior positions during a 30-year tenure at Albertson's Inc., which now operates about 2,500 retail stores in 38 states.
Miller replaces former top executive Martin L. Grass, who resigned Oct. 18 in the midst of financial woes that caused the company's stock to tumble by more than 80 percent within a year. The company said at the time that it planned to restate its earnings downwards by $500 million for the last three fiscal years.
Rite Aid also made revisions Nov. 2 based on preliminary results of it earnings for the first quarter of the fiscal year to $44.4 million from a previously stated $81 million. The firm reported a revised net loss of $21.6 million for the first half of the previous year, compared with an originally reported loss of $10.4 million.
The next step is to put together a turnaround strategy, Bosshard said. They'll be ready to hit the ground running.
Miller said Monday he would not sell a great number of stores in the West Coast, as previous management has said. He instead plans to clean them up and fill them with merchandise.
Joining Miller are former Fred Meyer executives Mary Sammons as president and chief operating officer; David Jessick as senior executive vice president and chief administrative officer; and John Standley as executive vice president and chief financial officer.
The U.S. Securities and Exchange Commission has been conducting its own review of Rite Aid. The company's former auditor, KPMG, resigned last month because it said it could no longer rely on information provided by Rite Aid.
Many of the debt-ridden company's woes surfaced after the company bought Thrifty PayLess for $1.4 billion plus the assumption of $890 million in debt in 1996. Rite Aid operates about 3,800 stores nationwide, with $13 billion a year in sales. It employs 85,000 people.