BREAKING NEWS Rite Aid files for second bankruptcy in two years... sparking fears of mass closures
Filing for bankruptcy protection allows it to negotiate with lenders to reduce its debts.
Announcing the move on Monday, Rite Aid said it will keep its 1,245 stores open during the bankruptcy process and will work to ensure customer prescriptions are transferred to other pharmacies as it seeks a sale.
Retail expert Neil Saunders said the second bankruptcy was inevitable because the chain's lack of money means it cannot keep store shelves stocked. This poor shopping experience means shoppers don't return.
Rite Aid remains a distant third in the retail pharmacy race, trailing industry giants CVS and Walgreens.
When Rite Aid filed for its last bankruptcy in October 2023, the company operated more than 2,000 stores and employed about 47,000 people.
After shuttering hundreds of locations — including almost all in Ohio and Michigan — Rite Aid emerged from bankruptcy with around 1,245 stores in 15 states. It is a far cry from 2008 when it operated 5,059 locations.
If a buyer doesn't emerge the chain could be forced to shut down even more of its stores.
Retail expert Neil Saunders, of GlobalData, said: 'The second bankruptcy of Rite Aid comes as no real surprise. The first bankruptcy did little to resolve the chain's issues, and it has been teetering on the edge of survival for quite some time.
'The business currently hasn't even got the financial firepower to trade on a normal basis. It is currently in the position of not being able to secure enough inventory to keep shelves stocked. This in turn deters customers which reduces sales and squeezes cash flow.
'Sadly, the chain has now reached the bottom of this vicious cycle and bankruptcy is the only route available to it.'
The pharmacy sector is in the midst of major upheaval, including Walgreens' recent deal to go private in a leveraged buyout led by Sycamore Partners
Rite Aid has been facing a series of challenges. Drugstores, generally, are struggling to compete with big-box chains and with Amazon, which launched its own online-only pharmacy in 2020.
On top of that, Rite Aid faced a series of lawsuits accusing the company of overprescribing opioids.
Rite Aid's move to almost totally leave Ohio and Michigan sparked panic.
Experts think that Rite Aid is moving out of areas where it cannot compete with much bigger chains CVS and Walgreens, which also owns Duane Reade.
Instead it is focusing where it can aim to be number two behind one or the other, such as in Pennsylvania.
Walgreens, the second largest pharmacy in the US behind CVS, is grappling with its own financial troubles, announcing last month it would close a 'significant' number of its 8,700 US stores.
The widespread 'retail apocalypse' that has seen brick-and-mortar stores struggle to combat rampant theft and increasingly tight margins is certainly not contained to drugstores.
A woman browses the shelves of a Rite Aid in Alhambra, California on October 18, 2023. This store was due to close in days following the bankruptcy announcement on October 15
Rite Aid was once the the third largest drugstore chain in the country, operating over 5,000 locations across the US. After the bankruptcy, that could dwindle to just 1,300
In 2024, more than 7,300 stores closed, a nearly 60 percent increase from the year before.
Experts predict 2025 will be worse. They warn up to 15,000 physical storefronts could shut down by the end of this year.
Dozens of giant chains — including Macy's, Party City, and Big Lots — have been behind store closures in the past 12 months amid changing customer trends.
Dollar stores have been hit hard too, with 99 Cents Only announcing in April it would shutter all 371 of its locations across California, Texas, Arizona and Nevada.
Express — a mall staple — filed for bankruptcy last April and said it would shut 95 Express outlets alongside all of its UpWest stores.
It has also been a tough 12 months for home improvement chains. LL Flooring entered bankruptcy in September, and was set to close all 442 stores across 47 states under a buyer came in later that month.
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