A bankrupt essential retailer now makes more unexpected closures, a consequences of fierce competition from larger players.
Rite Aid saw its sales slip as expenses increased, particularly due to interest owed on a mountain of debt it took on to keep pace with industry leaders CVS Health, Walgreens Boots, Walmart, and others.
Walmart is the fifth largest company ranked by prescription market share, and Costco is ranked 11th.
Amazon is also expanding more deeply into healthcare, including via mail-order prescriptions.
Rite Aid also faces new upstarts, including billionaire Mark Cuban’s Cost Plus Drugs.
Cuban’s pharmacy provides discount prescriptions via mail order, undercutting competitors by adding just 15% to his cost, plus a modest $5 processing fee.
Ultimately, sliding sales of everyday essentials, like aspirin, vitamins, and toothpaste, stiff competition, and rising interest expenses on its over $3.3 billion in debt proved a big pill for Rite Aid to swallow, reports TheStreet.
Its quarterly interest expense had swelled 35% year-over-year to $65 million before Rite Aid’s bankruptcy filing on Oct. 15.
In March 2023, the Department of Justice filed a civil suit against Rite Aid alleging pharmacists “repeatedly filled prescriptions for controlled substances with obvious red flags” and that it “intentionally deleted internal notes about suspicious prescribers”, which further damaged the company.
Walgreens Boots and CVS Health settled similar opioid suits for $5.7 billion and $4.9 billion.
The possibility that Rite Aid would need to finance a billion-dollar settlement made business-as-usual untenable, given its losses had exceeded $300 million in Q2 last year.
After filing for bankruptcy, Rite Aid announced 354 store closures in separate court filings in 2023.
The closures have continued this year.
So far, it’s announced 75 more store closures in 2024, including locations in California, New York, and New Jersey.
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Also Read: This Massive Restaurant Is Now Closing 41 Locations
Other Economy News Today
A massive US grocery is now closing an unexpected location after shutting down 22 stores recently, the company confirms.
Low profitability has Walmart shutting down some stores, with one’s full closing date steadily approaching, reports The-Sun.
The Walmart located on South High Street in Columbus Ohio closed down on February 16.
But it’ll close its doors officially on March 4 when it bids farewell to the last open part of its store — the pharmacy.
This comes after locations in San Diego and El Cajon, California, which is located about 16 miles from San Diego, shut on February 9 as previously reported by The U.S. Sun.
While the retailer has suffered 22 closures in the past year, it’s now seen three stores shutter their doors in just weeks.
The closing of the Columbus, Ohio location was “not made lightly” according to a letter penned by Walmart to the Mayor of Columbus.
The retailer said the decision was made after a careful and thoughtful review process.
“While our underlying business is strong, this store hasn’t performed as well as we hoped, and we made the decision to not renew the lease,” the company wrote.
The announcement came days before the store’s closing and employees only found out about the news on February 2.
But, the store’s roughly 180 workers have months to search for jobs at other locations.
Employees have until May 3 to get a job at another Walmart and if they fail to do so, they’ll be terminated, reports The-Sun.
However, concerned shoppers should note that there are at least ten other Walmart stores in the Columbus area.
Despite the closures, Walmart recently announced expansion plans.
The company is expected to open 150 new or expanded locations and renovate hundreds of others.
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Also Read: A US Company Now Declares An Unexpected Bankruptcy
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