Rite Aid Announces Closure of Additional 30 Stores
Rite Aid, grappling with financial challenges and intensified competition in the pharmaceutical retail sector, is set to shutter approximately 30 more locations across the United States. This move comes in addition to the 100 stores that the pharmacy chain declared last month as part of its broader restructuring efforts.
The recent disclosure of closures was outlined in a bankruptcy court filing, revealing 31 stores in a dozen states affected. Notable closures include seven stores in California, four in Pennsylvania, and three each in Ohio, Virginia, and Washington. The remaining affected states include Michigan, New Jersey, Oregon, and New York, each with two closures, and Connecticut, Maryland, and Nevada, each with one closure.
Upon completion of both rounds of closures, Rite Aid will have around 2,000 stores remaining. The company did not immediately respond to CNN’s request for comments.
Rite Aid, positioned as the third-largest standalone pharmacy chain in the U.S., has faced ongoing challenges as the pharmacy retail sector contends with increased competition from giants like Amazon, Walmart, Target, and Costco. These retail giants have expanded their presence in the pharmaceutical space, offering alternative and customer-friendly options.
The financial struggles of Rite Aid have been exacerbated by legal issues related to allegations of filing unlawful opioid prescriptions. Over the past six years, the company has incurred nearly $3 billion in losses, and its stock has plummeted by more than 90% this year.
In a bid to navigate through its financial challenges, Rite Aid has secured $3.5 billion in financing and debt reduction agreements. The company plans to expedite store closures and divest some of its businesses, including prescription benefit provider Elixir Solutions. The bankruptcy filing could potentially enable Rite Aid to address legal disputes at a significantly reduced cost.
The pharmaceutical retail landscape has witnessed a reduction in physical footprint across major players due to declining profits from prescription drug sales, primarily influenced by lower reimbursement rates. CVS, the largest U.S. chain, closed 244 stores between 2018 and 2020, with plans to shut 900 stores by 2024 announced in 2021. Similarly, Walgreens announced the closure of 200 stores in 2019 and an additional 150 closures in June. Independent pharmacies have also experienced a nearly 50% decrease from 1980 to 2022, according to McKinsey, a consulting firm.
