Rite Aid Faces More Burdens as It Struggles Financially
On Oct. 4, Rite Aid disclosed that it was no longer in compliance with New York Stock Exchange (NYSE) “continued listing standards” and needs to take measures to boost its share price to regain good standing.
According to a company statement: “Under the NYSE rules, the company is provided with certain cure periods, and the company’s common stock will continue to be listed and traded on the NYSE during the cure periods, subject to the company’s compliance with other continued listing requirements. The current noncompliance with the NYSE listing standards does not affect the company’s ongoing business operations or its U.S. Securities and Exchange Commission reporting requirements, nor does it trigger any violation of its material debt or other obligations.”
Forbes reported that the price of Rite Aid shares was trading at less than 55 cents a share last week while the drug store chain continues to struggle financially amid reports of a bankruptcy restructuring. Last month, Rite Aid and its creditors were negotiating the terms of a bankruptcy plan that would include the closure of 400 to 500 of its locations. Reports further noted that the retailer would either sell or let creditors take over the remainder of its more than 2,300 stores across 17 U.S. states.
[Read more: “Rite Aid Hit With Class Action for Allegedly Sharing Customer Data With Meta”]
Forbes points out that it’s not the first time that Rite Aid has faced delisting from the NYSE. In 2019, Rite Aid shareholders approved a “reverse stock split” in an effort to keep the company’s stock from being delisted. Back then, Rite Aid’s share price had plummeted to less than $1 following two failed mergers that contributed to the ouster of CEO John Standley. Rite Aid is now run by interim Chief Executive Elizabeth “Busy” Burr after the removal of Heyward Donigan.
Despite positive trends in pharmacy for its first quarter ended June 3, Rite Aid’s front end sales proved to be more challenging. For its fiscal quarter ended June 3, the retail chain’s same-store sales increased 8.4% over the prior-year period, consisting of a 13.3% increase in pharmacy sales, partly offset by a 4.4% decrease in front end sales. Front end same-store sales, excluding cigarettes and tobacco products, decreased 3.8%.
The company's shrink was about $9 million over last year. To help lower that sizable amount, Rite Aid decided to close stores in high-shrink areas and invest in ways to secure product.
Meanwhile, the company is currently evaluating available options to regain compliance with the NYSE’s continued listing standards.
Employing more than 6,300 pharmacists, Philadelphia-based Rite Aid operates 2,200-plus retail pharmacy locations across 17 states. The company is No. 22 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America.
