Shares Tumble as Rite Aid Delays Financial Reports

Rite Aid Corp.’s plans to delay release of several financial reports until July sent its stock plummeting Wednesday after a halt in trading earlier in the day.

The nation’s third-largest pharmacy chain said late Tuesday that it had reached agreement with its lenders on the delay and planned to seek extensions on Securities and Exchange Commission filings for the remaining quarterly and annual reports for fiscal year 2000.

Rite Aid’s report for its fiscal third quarter ended Nov. 27 was due Tuesday.

“We believe it’s a responsible action to take,” Vice President Karen Rugen said. “We’ve had a new management team for a month, we’ve had new auditors for just a few weeks, and with all the delays with the re-audit of ‘97, ’98 and ‘99, we realized we didn’t have enough time.”

The announcement didn’t assuage analysts’ concerns, however. The stock slumped $2.75 to close at $7.88 on the New York Stock Exchange.

“The move tells me that the problems run pretty deep and that there is no easy solution to remedying the problems with Rite Aid’s former internal accounting methodologies,” analyst Steven Valiquette of Warburg Dillon Read.

The Camp Hill, Pa.-based chain has been trying to recover from a series of disasters. Former top executive Martin L. Grass was ousted in October, and a new team led by Chief Executive Robert Miller has pledged to improve profitability with stricter financial controls and strategic marketing.

Rite Aid also has switched auditing firms, and a restatement of its earnings for the last three years was expected to result in a $500-million reduction.

One rumor dogging the company Tuesday--that the NYSE was about to delist its stock--was denied by NYSE officials.