84129--4/30/2007--RITE_AID

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{acquisition, growth, future}

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Factors Affecting our Future Prospects Risks Related to Our Financial Condition We are highly leveraged. Our substantial indebtedness could limit cash flow available for our operations and could adversely affect our ability to service debt or obtain additional financing if necessary. Borrowings under our existing and new credit facilities and expenses related to the sale of our accounts receivable under our receivables securitization agreements are based upon variable rates of interest, which could result in higher expense in the event of increases in interest rates. The covenants in our current indebtedness and the indebtedness to be incurred to finance the acquisition impose restrictions that may limit our operating and financial flexibility. Risks Related to Our Operations We need to continue to improve our operations in order to improve our financial condition, but our operations will not improve if we cannot continue to effectively implement our business strategy or if our strategy is negatively affected by general economic conditions. Our new store and store relocation development program requires entering construction and development commitments and occasionally purchasing land that will not be utilized for several years which may limit our financial flexibility. We are dependent on our management team, and the loss of their services could have a material adverse effect on our business and the results of our operations or financial condition. We are substantially dependent on a single wholesaler of branded pharmaceutical products to sell products to us on satisfactory terms. A disruption in this relationship may have a negative effect on our results of operations, financial condition and cash flow. Risks Related to Our Industry The markets in which we operate are very competitive and further increases in competition could adversely affect us. Drug benefit plan sponsors and third party payors could change their plan eligibility criteria and further encourage or require the use of mail-order prescriptions which could decrease our sales and reduce our margins and have a material adverse effect on our business. The availability of pharmacy drugs is subject to governmental regulations. Changes in third party reimbursement levels for prescription drugs could reduce our margins and have a material adverse effect on our business. We are subject to governmental regulations, procedures and requirements; our noncompliance or a significant regulatory change could adversely affect our business, the results of our operations or our financial condition. Certain risks are inherent in providing pharmacy services; our insurance may not be adequate to cover any claims against us. We will not be able to compete effectively if we are unable to attract, hire and retain qualified pharmacists. We may be subject to significant liability should the consumption of any of our products cause injury, illness or death. Risks Related to The Pending Acquisition Although we expect that the pending acquisition of the Brooks and Eckerd drugstore chains will result in benefits to us, we may not realize those benefits because of integration difficulties. Following the pending acquisition, for so long as Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family) maintain certain levels of Rite Aid stock ownership, Jean Coutu Group (and, subject to certain conditions, certain members of the Coutu family) will exercise significant influence over us. We will incur significant indebtedness in connection with the acquisition of the Brooks and Eckerd drugstore chains and the resulting debt service obligations may significantly limit our ability to execute our business strategy and increase the risk of default under our debt obligations. The announcement and pendency of the pending acquisition may cause disruptions in the business of the Brooks and Eckerd drugstore chains, which could have an adverse effect on their business, financial condition or results of operations and, post-closing, our business, financial condition or results of operations. The pending acquisition is subject to the approvals from government entities that may not be received as well as certain closing conditions that may not be satisfied or waived. Failure to consummate the pending acquisition could have a material adverse effect on us. We cannot complete the pending acquisition unless we receive various consents, approvals and clearances from antitrust and other authorities in the United States. While we believe that we will receive the requisite approvals from these authorities, there can be no assurance of this. If the pending acquisition is not consummated for any reason, we will have incurred substantial expenses without realizing the anticipated benefits of the pending acquisition, including anticipated net reductions in costs and expenses. We have incurred substantial legal, accounting and financial advisory fees and our management has devoted considerable time and effort in connection with the pending acquisition. Conflicts of interest may arise between us and Jean Coutu Group, which may be resolved in a manner that adversely affects our business, financial condition or results of operations. Following the completion of the pending acquisition, we will be dependent on Jean Coutu Group for certain transitional services pursuant to a transition services agreement. The failure of Jean Coutu Group to perform its obligations under the transition services agreement could adversely affect our business, financial condition or results of operations. Subject to certain limitations, Jean Coutu Group may sell Rite Aid common stock at any time following the completion of the acquisition of the Brooks and Eckerd drugstore chains, which could cause our stock price to decrease. Upon successful completion of the pending acquisition, we will be able to issue more shares of our common stock than currently authorized. As a result, such future issuances of our common stock could have a dilutive effect on the earnings per share and voting power of current stockholders.

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84129--4/30/2007--RITE_AID_CORP