Management at Rite Aid Corporation (RAD) was executing a turnaround strategy centered on increasing the profitability of the existing store base.

However, the acquisition of Brooks Eckerd prior to a convincing turnaround in profitability has increased the debt burden and interest expense.

Moreover, Wal-Mart’s foray into the retail generic drug market has pressured the company’s pharmacy margin. Given the weakness of front-end sales and management’s continual lowering of EPS guidance (for larger net losses), the stock’s rating remains Underperform.Zacks Investment Research