Now that Rite Aid Corp. (RAD) has some breathing room from securing critical debt refinancing, investors are refocusing on the company's turnaround efforts.

With the 2007 purchase of the Brooks Eckerd chains, Rite Aid saddled itself with debt shortly before the economy slid into recession. But last week, Rite Aid refinanced about $1.9 billion of debt, including a major portion of its September 2010 maturities, giving it more time to improve operations, with major maturities moved back at least a few years.

As the company's refinancing picture has improved, Rite Aid's shares have moved substantially off their 20-cent lows, reaching a 52-week high of $1.97 on June 5, but now hovering closer to the $1.20 range.

For some time, Rite Aid's performance has trailed its larger competitors, Walgreen Co. (WAG) and CVS Caremark Corp. (CVS), but in recent months, its sales trends have started to improve, giving some industry observers hope that the chain may be starting to, ever so slowly, turn a corner.

Wednesday, the drug-store chain posted its eighth consecutive quarterly loss, but its fiscal first-quarter loss narrowed on gains in sales at stores open at least a year and on higher prescription-drug sales.

"The external environment remains challenging, but Rite Aid has been able to limit the decline in front-end sales without hurting margins markedly," Barclays Capital analyst Meredith Adler wrote in a note, maintaining an equal weight rating on the stock.

To be sure, while some analysts have been encouraged by Rite Aid's recent progress, they say any major improvement will likely take multiple years. The company's Brooks Eckerd stores continue to post sluggish sales, and as Rite Aid's debt will come at a higher cost, that further delays any potential return to profitability, Morgan Stanley analyst Mark Wiltamuth said in a note, maintaining his underweight rating.

"Rite Aid has been pursuing a turnaround story for many years," Wiltamuth said. "We await clear progress...to get more interested in the stock."

To work on improving its performance, Rite Aid's management recently implemented a store segmentation strategy, where it aims to cut costs in underperforming stores and boost margins at better-performing ones.

With this new strategy, the drugstore chain could increase its earnings before interest, taxes, depreciation and amortization, or Ebitda, a key measure of operating cash flow, by about $550 million over a five-year period, management has said.

In its earnings call Wednesday, Rite Aid President and Chief Operating Officer John Standley said the drugstore has made the most progress so far at its lower-volume stores, taking actions such as reducing store hours and eliminating salaried positions in favor of hourly ones to trim costs.

Barclays' Adler estimates about a fourth of Rite Aid's more than 4,800 stores fall in the lower-volume group.

Rite Aid is also looking for rent reductions in about 500 of its underperforming stores, with the chance that stores where the lease isn't renegotiated could be closed.

While Chairman and Chief Executive Mary Sammons expressed optimism Wednesday that Rite Aid's results should continue to improve as it implements its new strategy, she acknowledged that the company still had "a lot of hard work ahead," as it continues to face a challenging economic environment.

"Our initiatives to grow sales, improve operating efficiency, and take unnecessary costs out of the business are the right ones to deliver solid returns in the future, just as they did in this quarter," Sammons said in the earnings call.

-By Kelly Nolan, Dow Jones Newswires; 212-416-2167; kelly.nolan@dowjones.com