A Popular Retailer Is Now At High Risk of Bankruptcy

October 11, 2023

A popular prescription retailer is now at high risk of bankruptcy which may force the company to close down as many as 500 stores.

Rite Aid is a retail store chain providing critical healthcare services to millions of Americans.

It operates nearly 2,300 retail stores in 17 states, making it the preferred store for millions of Americans seeking to fill prescriptions or buy essential daily items, like toothpaste or aspirin.

“Aging baby boomers have been a significant tailwind for the company’s retail pharmacy sales; however, Rite Aid’s front-end sales are slowing because of competition and theft,” reports TheStreet.

“Non-pharmacy same-store sales open at least one year slipped 4.4% year over year in the second quarter, even as the company reported a $9 million increase in retail store shrink, the industry term for losses due to theft and unaccounted inventory.

Rite Aid is also suffering because rising interest rates have caused variable interest on its debt to balloon.

The retail pharmacy chain, which was already struggling to make good on loans it had previously taken out to acquire competitors, such as Brooks, spent $65 million on interest alone last quarter, up 35% from one year ago.”

The Department of Justice filed a suit against it earlier this year, alleging it knowingly filled opioid prescriptions that it shouldn’t have, “potentially putting the company on what may turn out to be an inevitable path to insolvency.”

Walgreens and CVS settled similar suits for $5.7 billion and $4.9 billion over the past year.

However, Rite Aid doesn’t have nearly the financial firepower of its competitors.

Its market capitalization is only $43 million, and it owes over $3 billion to its lenders.

Rite Aid has been exploring the possibility of Chapter 11 bankruptcy according to the WSJ, which would result in the immediate closure of 500 stores.

Also Read: Another Popular Retailer Now Declares An Unexpected Bankruptcy

Other Economy News Today

Massive layoffs in Illinois has now hit tens of thousands of people this year according to fresh data from with the Illinois Department of Commerce and Economic Opportunity.

“Illinois experienced a wave of job cuts in August, with a wide range of businesses announcing layoffs across the month,” reported Ash Jurberg earlier this year.

“Yellow Corp laid off almost 3000 workers, while CVS Health laid off hundreds across several locations.

Under the Worker Adjustment and Retraining Notification Act, an employer with more than 100 full-time workers must provide a 60-day notice before laying off 50 or more people at a single site.“

California remains the #1 state with the most layoffs in the country.

In second place is Colorado followed by Illinois, Washington, New York, Texas, New Jersey, Florida, Michigan, and Massachusetts.

Below are the businesses that filed a WARN act in September with the Illinois Department of Commerce and Economic Opportunity advising of upcoming layoffs this year:

Heartland Alliance. Chicago 48 jobs cut
MV Transportation. Niles 90 jobs cut
Sodexo, Inc. (at Lake Forest Academy. ) Lake Forest 43 jobs cut
WestRock Company. Chicago 73 jobs cut
T-Mobile U.S.A., Inc. Downers Grove 57 jobs cut
Volition GamesChampaign 183 jobs cut

So far, in 2023, there have been 13,954 jobs cut in Illinois.

This is already double the number of job losses that occurred in 2022.

Below is an up-to-date list of layoff notifications in Illinois for 2023 so far.

View the full list here.

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