Dec. 20 (Bloomberg) -- Rite Aid Corp., the third-largest U.S. drugstore chain, posted a wider quarterly loss than analysts estimated and reduced its full-year forecasts for the second time in three months, sending the shares to the biggest drop in more than eight years.

The net loss was $84.8 million, or 12 cents a share, for the third quarter through Dec. 1 because of costs related to the acquisition of the Brooks and Eckerd chains, the company said today in a statement. Analysts estimated a loss of 8 cents.

Chief Executive Officer Mary Sammons oversaw the purchase of 1,800 drugstores to compete against larger rivals Walgreen Co. and CVS Caremark Corp., resulting in additional expenses of about $200 million. Sales of flu remedies were less than a year earlier and demand for digital-film processing and snacks fell during what may be the slowest holiday shopping season since 2002.

``They mentioned a weakening consumer for a company that people thought was somewhat recession resistant,'' said Carla Casella, a fixed-income analyst at JPMorgan Chase & Co. in New York. ``It's a little scary when they start talking about a weakening consumer. People are going to lose patience.''

Third-quarter results included $62.1 million of interest expense related to the Brooks and Eckerd purchase, integration costs of $53.3 million, an expense of $69.7 million for depreciation and amortization, and store closing and impairment costs of $16.7 million for the acquisition.

Missing Estimates

Eight analysts, on average, predicted a third-quarter loss of 8 cents a share in a survey by Bloomberg. Sales increased 51 percent to $6.5 billion, the company said Dec. 6.

Rite Aid, based in Camp Hill, Pennsylvania, plunged $1.36, or 33 percent, to $2.74 at 10:35 a.m. in New York Stock Exchange composite trading for the biggest drop since March 1999. The stock, at the lowest price since April 2003, lost 25 percent of its value this year before today.

``They've suffered from having older locations and really capital-starved stores,'' said Mitch Corwin, an analyst at Morningstar Inc. in Chicago, who advises investors to buy the shares. ``They are dealing with companies with greater resources like Walgreen and CVS.''

Rite Aid predicts sales for the year of $24.3 billion to $24.6 billion, down from an earlier estimate of $24.5 billion to $25.1 billion. It also forecast a wider loss of 27 cents to 31 cents, compared with an earlier estimate for a loss of 15 cents to 27 cents a share.

Weak Flu Season

``The cough, cold and flu season continues to be weaker than last year and we are seeing slower holiday sales than expected so far,'' Sammons said in the statement.

This year's holiday shopping season may grow at the slowest pace since 2002, according to the National Retail Federation. U.S. shoppers finished just 20 percent of their holiday gift buying last weekend, according to a joint survey conducted by the International Council of Shopping Centers and UBS Securities LLC.

The drugstore chain also reduced its forecast for full-year adjusted earnings before interest, taxes, depreciation and amortization to $950 million to $1 billion. Previously, it predicted $1 billion to $1.1 billion.

Sales at the Brooks and Eckerd stores continue to drop, Sammons said on a conference call with analysts.

``They were negative when we got them,'' Sammons said. ``They continue to be negative. The trend actually did worsen during the third quarter. We would expect them to begin improving, and we are seeing that with the activities that we are doing.''

Same-Store Sales

Sales at stores open at least a year rose 0.7 percent in the quarter from a year ago. Same-store pharmacy sales increased 1.2 percent, while sales of non-pharmacy goods such as snacks and health and beauty products fell 0.4 percent.

Rite Aid completed its acquisition of Eckerd and Brooks from Jean Coutu Group Inc. for about $4 billion in June. The purchase made Rite Aid the largest drug retailer on the U.S. East Coast. With more than 5,100 locations nationwide, Rite Aid trails CVS's 6,200 locations and Walgreen's more than 6,100.

Of the 11 analysts covering Rite Aid in the past 12 months, two rate the stock ``buy,'' five say ``hold'' and four recommend selling the shares.

In the year-ago third quarter, Rite Aid said it had net income of $1.1 million, or a loss of 1 cent after the payment of preferred dividends.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net.

Last Updated: December 20, 2007 10:40 EST