Rite Aid will close more stores as part of its financial restructuring.
Following months of volatility, including recent speculation that it could be delisted from the New York Stock Exchange, Rite Aid Corp. has officially declared bankruptcy. The Oct. 15 filing comes after the chain faced post-COVID declining sales and costly lawsuits related to prescriptions of opioids.
In its announcement, Rite Aid reported that it is aiming to restructure with $3.45 billion in new financing from some of its lenders. “This financing is expected to provide sufficient liquidity to support the company throughout this process,” the company’s statement declared.
While the corporation works to stay afloat, it is implementing more rescue measures, too. Rite Aid will close more underperforming stores in at least 17 states.
In addition, new leadership has been brought in to steer the company. Rite Aid’s board of directors has appointed Jeffrey S. Stein as CEO, replacing interim leader Elizabeth “Busy” Burr, who has served in that role since January. Stein has a strong track record for supporting companies undergoing financial restructuring and business transformations; he is founder and managing partner of Stein Advisors LLC and previously served as CEO and chief restructuring officer of GWG holdings.
Losses have been steep at Rite Aid. For the latest quarter that ended in June, revenue dropped from $6.01 billion to $5.65 billion on a year-over-year-basis with net losses pegged at $306.7 million for the three-month period. The chain has also been the target of multimillion-dollar lawsuits claiming that painkiller prescriptions were filled despite red-flag warnings.
As Rite Aid moves through bankruptcy proceedings, it will use the fresh funding to access additional liquidity and accelerate its store footprint optimization plan, the company shared.
New CEO Stein said that the protection will help the company continue to serve its customers. “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy,” he remarked.
He also addressed store counts and closings. “The court-supervised process provides Rite Aid with legal tools to accelerate our footprint optimization in an efficient and orderly manner. We look forward to working closely with our landlords to determine the best path forward for each of our stores,” Stein added.
Employing more than 6,300 pharmacists, Philadelphia-based Rite Aid operates 2,200-plus retail pharmacy locations. The company is No. 22 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America.