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Rite Aid is closing another 30 stores

CBS News Detroit Digital Brief for Nov. 29, 2023
CBS News Detroit Digital Brief for Nov. 29, 2023 03:57

New York (CNN) — Rite Aid is closing another roughly 30 locations across the U.S. in addition to the 100 the bankrupt chain announced last month as part of its restructuring efforts.

The latest round of closures was revealed in a bankruptcy court filing with 31 stores closing in a dozen states, including seven in California, four in Pennsylvania, three locations each in Ohio, Virginia, and Washington, and two each in Michigan, New Jersey, Oregon and New York. The remaining stores are one each in Connecticut, Maryland, and Nevada.

Rite Aid will have about 2,000 stores remaining when both rounds of closures are complete. The company didn't immediately reply to CNN's request for comment.

The writing has been on the wall for some time for Rite Aid, the third-biggest standalone pharmacy chain in the US, as the entire drug store retail sector struggles to compete with Amazon and big-box chains like Walmart, Target, and Costco moving deeper into the space and offering more customer-friendly alternatives to the nationwide pharmacy chains.

Compounding its problems were legal troubles stemming from accusations of filing unlawful opioid prescriptions for customers.

Rite Aid is in much worse financial shape than its competitors. Over the past six years, Rite Aid has tallied nearly $3 billion in losses, and its stock is down more than 90% for the year.

While it has secured $3.5 billion in financing and debt reduction agreements from lenders to keep the company afloat through its bankruptcy, Rite Aid said it would accelerate store closures and sell off some of its businesses, including prescription benefit provider Elixir Solutions. Bankruptcy could also help Rite Aid to resolve its legal disputes at a vastly reduced cost.

The majority of drugstores' sales come from filling prescriptions, but profits from that segment have declined in recent years because of lower reimbursement rates for prescription drugs. That has forced Rite Aid and its rivals to reduce their physical footprint in recent years.

CVS, the largest US chain, closed 244 stores between 2018 and 2020. In 2021, it announced plans to close 900 stores by 2024. Walgreens said in 2019 it would close 200 stores and in June announced an additional 150 store closures.

The number of independent pharmacies decreased by nearly 50% from 1980 to 2022, according to consulting firm McKinsey.

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