The Jean Coutu Group Inc. posted a huge third-quarter loss after writing down the value of its investment in a distressed U.S. drug store, the Canadian pharmacy chain said Thursday.

Quebec-based Jean Coutu lost $399.2 million for the three months ended Nov. 28 versus a profit of $9.5 million for a comparable period one year earlier.

Three month stock chart for the Jean Coutu Group Inc.

Those results translated into a loss of $1.66 a share for the latest three-month period versus a four cent gain for the same time in 2007.

Coutu, which has almost 350 drug stores in Quebec, New Brunswick and Ontario, took the financial hit because of a decision to absorb a $357.8 million writedown in its 32 per cent holdings in Rite Aid Corp.

Rite Aid is the third-biggest pharmacy chain in the United States but has suffered through an extended period of losses.

"[Jean Coutu] has recorded in the third quarter a preliminary provision against the carrying value of its investments in Rite Aid following the decline in the trading value of its common shares for an extended period of time," said François Coutu, Jean Coutu's president and chief executive officer.

In the past year, Rite Aid shares have plummeted along with the company's financial fortunes. Rite Aid's stock traded at 35 cents US a share Thursday, well below its 52-week high of $3.25.

Coutu said it believes Rite Aid's financial situation is improving, but accounting rules force the Canadian company to take the writedown.

Once Rite Aid's red ink was subtracted, Jean Coutu earned $36.7 million, or 15 cents a share, in the third quarter.

Jean Coutu's third-quarter revenue stood at $620.3 million, a six per cent rise compared to the same period last year.