Rite Aid Announces Second Quarter Results.

* Reports Second Quarter Loss of $.10 Per Diluted Share Compared to a Loss of $.02 Per Diluted Share in Prior Year

* Reports Second Quarter Adjusted EBITDA of $261.5 Million Compared to Adjusted EBITDA of $154.7 Million in Prior Year

* Updates Fiscal 2008 Guidance; Increases

CAMP HILL, Pa. -- Rite Aid Corporation (NYSE:RAD) today announced financial results for its second quarter ended September 1, 2007. Other than same-store comparisons, results for the second quarter reflect the acquisition of the Brooks Eckerd stores and distribution centers acquired June 4, 2007.

Revenues for the 13-week second quarter were $6.60 billion versus revenues of $4.29 billion in the prior year second quarter. Revenues increased 53.9 percent.

Same store sales increased 1.1 percent during the second quarter as compared to the year-ago like period, consisting of a 1.4 percent pharmacy same store sales increase and a 0.6 percent increase in front-end same store sales. The number of prescriptions filled in same stores increased 0.4 percent. (The acquired Brooks Eckerd stores are excluded from the same store sales and prescription count calculations.) Prescription sales accounted for 67.4 percent of total sales, and third party prescription sales represented 95.9 percent of pharmacy sales.

Net loss for the quarter was $69.6 million or $.10 per diluted share compared to last year's second quarter net loss of $0.3 million or $.02 per diluted share. The increases in adjusted EBITDA of $106.8 million and income tax benefit of $36.1 million were exceeded by the increase in expenses resulting from the Brooks Eckerd acquisition, which included an increase in depreciation and amortization of $65.2 million, additional interest expense of $55.1 million, integration expense of $52.1 million, a one-time financing commitment charge of $12.9 million and an increase in stock-based compensation expense of $6.7 million.

Adjusted EBITDA (which is reconciled to net loss on the attached table) was $261.5 million or 4.0 percent of revenues for the second quarter compared to $154.7 million or 3.6 percent of revenues for last year's second quarter. The $106.8 million increase in adjusted EBITDA was due to the increase in revenues, which came primarily from acquired Brooks Eckerd stores, along with an improvement in gross margin rate. Excluding occupancy expenses related to the company's new and relocated store program, expenses as a percent of revenues were lower.

"We had a strong second quarter. We grew our business, improved the gross margin rate and controlled expenses. Our integration of Brooks Eckerd is off to an excellent start, and we're seeing more cost-saving synergies from the acquisition than we initially expected," said Mary Sammons, Rite Aid chairman, president and CEO. "At the same time we're converting the acquired stores to Rite Aid, we're also continuing our organic store growth and remain on target to open 125 new and relocated stores this year. We're on track to deliver the full potential of a bigger and better Rite Aid."

In the second quarter, the company acquired 1,854 Brooks Eckerd stores, opened 11 stores, relocated 8 stores, acquired one other store and closed or sold 56 stores, which include the 23 divestitures required by the Federal Trade Commission (FTC). Stores in operation at the end of the quarter totaled 5,142.

Company Confirms Fiscal 2008 Adjusted EBITDA Guidance, Updates Other Fiscal 2008 Guidance

Rite Aid confirmed its fiscal 2008 guidance for adjusted EBITDA, integration expenses and capital expenditures and increased its guidance for acquisition-related cost savings. The company now expects acquisition-related cost savings for fiscal 2008 to be approximately $200 million, as compared to the previous guidance of approximately $155 million, which are expected to come primarily from the areas of merchandising, purchasing, advertising, distribution and administration.

Adjusted EBITDA (which is reconciled to net loss on the attached table) is expected to be between $1.0 billion and $1.1 billion, including the nine months of acquisition-related cost savings of approximately $200 million. Integration expense is expected to be $145 million. Capital expenditures, including integration capital expenditures but excluding proceeds from sale and leaseback transactions, are expected to be between $825 million and $875 million. Proceeds from sale and leaseback transactions are expected to be approximately $100 million.

As a result of current sales trends, the company revised its guidance for sales and same store sales. Sales are expected to be between $24.5 billion and $25.1 billion. Same store sales, which will not include the acquired stores until one year after close, are expected to improve 1.3 percent to 3.3 percent over fiscal 2007. This compares to previous fiscal 2008 sales guidance of between $25.3 billion and $26.0 billion, with same store sales improving 3.8 percent to 5.8 percent over fiscal 2007.

Based primarily on recent market changes in interest rates and an increase in amortization expense related to acquired intangible assets, net loss for fiscal 2008 is expected to be between $78 million and $161 million or a loss per diluted share of $.15 to $.27. This compares to previous fiscal 2008 net loss guidance of $47 million to $129 million or a loss per diluted share of $.11 to $.23.

Increases Acquisition-Related Cost Savings Guidance for Fiscal 2009

Rite Aid also increased its guidance for acquisition-related cost savings for fiscal 2009 to $300 million as compared to previous guidance of $225 million, which are expected to come primarily from the areas of merchandising, purchasing, advertising, distribution and administration. Accretion related to the Brooks Eckerd acquisition in fiscal 2009 is now expected to be $.12 to $.14 per diluted share as a result of delay in the timing of closed store charges. Previously the company expected the acquisition to be accretive in fiscal 2009 by $.18 to $.20 per diluted share.

Conference Call Broadcast

Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team. The call will be simulcast via the internet and can be accessed through the websites www.riteaid.com in the conference call section of investor information and www.StreetEvents.com. A playback of the call will be available on both sites starting at 12 p.m. Eastern Time today. A playback of the call will also be available by telephone for 48 hours beginning at 12 p.m. Eastern Time today until 12 p.m. Eastern Time on September 29. The playback number is 1-800-642-1687 from within the U.S. and Canada or 1-706-645-9291 from outside the U.S. and Canada with the eight-digit reservation number 16088846.

Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of more than $27 billion and more than 5,100 stores in 31 states and the District of Columbia. Information about Rite Aid, including corporate background and press releases, is available through the company's website at www.riteaid.com.

This press release may contain forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include our high level of indebtedness, our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our senior secured credit facility and other debt agreements, our ability to improve the operating performance of our stores in accordance with our long term strategy, our ability to realize the benefits of the Brooks Eckerd acquisition, our ability to hire and retain pharmacists and other store personnel, the efforts of private and public third-party payors to reduce prescription drug reimbursements and encourage mail order, competitive pricing pressures, continued consolidation of the drugstore industry, changes in state or federal legislation or regulations, the outcome of lawsuits and governmental investigations, general economic conditions and inflation, interest rate movements and access to capital. Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks and uncertainties. Readers are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Forward-looking statements can be identified through the use of words such as "may", "will", "intend", "plan", "project", "expect", "anticipate", "could", "should", "would", "believe", "estimate", "contemplate", and "possible".

See the attached table or the 8-K furnished to the Securities and Exchange Commission on September 27, 2007 for definition, purpose and reconciliation of a non-GAAP financial measure referred to herein to the most comparable GAAP financial measure.

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