Drugstore retailer Rite Aid is shuttering another 31 stores in a dozen states as part of its ongoing restructuring efforts.
The retailer will close seven stores in California, four in Pennsylvania, three each in Ohio, Virginia, and Washington, and two each in Michigan, New Jersey, Oregon, and New York. Once the latest round of closures is complete, Rite Aid will have around 2,000 stores remaining in the U.S.
The struggling retailer filed for bankruptcy in October and named Jeffrey S. Stein as CEO, chief restructuring officer (CRO), and a board of directors member. To support liquidity through the process, the retailer reached an agreement with senior secured noteholders on the terms of a financial restructuring plan designed to speed up ongoing business transformation. This included some $3.45 billion in new financing from some of its lenders. At the time, Rite Aid also shuttered over 150 underperforming stores.
In addition to poor sales, the drugstore retailer has struggled to overcome mounting debt and more than a thousand federal, state, and lawsuits alleging its pharmacies contributed to an oversupply of prescription opioids, including one announced last year with the state of West Virginia that was settled for an alleged $30 million, according to U.S. News.
The US pharmacy landscape has been through a period of transformation over the last few decades.
According to McKinsey research, the number of independent pharmacies has fallen by nearly 50% since 1980, leveling off at just 20,000 locations since 2000, as consumer preferences largely shifted to big box retailers and chains. From 2010 to 2020, pharmacies focused on consolidation – such as CVS’ 2015 acquisition of 1,700 Target pharmacies – but post-pandemic, the emphasis has been on rationalization, with the biggest companies closing stores in the wake of slumping sales.
In 2019, for example, Walgreens Boots Alliance it would be closing 200 stores across the United Kingdom after already completing a 20% headcount reduction at its Boots U.K. headquarters. More recently, Walgreens reported Q4 2023 earnings that missed Wall Street estimates, spurring a reassessment of nonessential spend and a pause on implementing regional micro fulfillment centers to improve product availability.
