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Axios
07-05-2025
- Business
- Axios
Rite Aid stores to close or be sold to new owner in bankruptcy
All Rite Aid stores will close or be sold to a new owner in the coming weeks and months as the struggling retailer goes through its second Chapter 11 bankruptcy filing. Why it matters: The Philadelphia-based drugstore chain is looking to sell both its pharmacy business and its stores, according to bankruptcy protection documents. Rite Aid bankruptcy 2025 The big picture: Rite Aid faced a host of problems following its previous bankruptcy, including inventory shortages as vendors played hardball with the company on trade terms. That "negatively impacted liquidity and prevented the company from replenishing its front-end stock," according to Fitch Ratings analyst Joshua Clark. "The lack of inventory led to decreased sales, particularly in high-margin front-end products, exacerbating liquidity problems." The company has also historically been "significantly burdened by its suboptimal lease portfolio," chief transformation officer Marc Liebman said in a court filing. What we know about Rite Aid closing stores By the numbers: The company has 1,240 stores in 15 states listed on its store locator website Wednesday. California has 347 locations, Pennsylvania has 345 and New York has 178 locations. The retailer has been closing stores for years before its 2023 bankruptcy filing, which it entered with more than 2,100 locations. Zoom in: In a letter to customers, Rite Aid says the "majority of our stores will remain open and operating for the next few months where you can continue to access pharmacy services and products in stores and online, including prescriptions and immunizations." "We are working to facilitate a smooth transfer of customer prescriptions to other pharmacies," the company said. What they're saying: "There have been some rumors about stores closing immediately and going dark, especially in New York. These rumors are not true," Alice Eaton, an attorney with the Cole Schotz law firm, said during a bankruptcy hearing Wednesday. Eaton noted five stores would close this week and said those locations are in: Portland, Oregon; Brooklyn, New York; Peterborough, New Hampshire; Vernon, Pennsylvania; and Cheshire, Connecticut. "We expect Rite Aid is likely facing ongoing challenges similar to its drug retail peers, including rate reimbursement pressure that is constraining pharmacy margins and increased front-end competition from lower-priced competitors in the discount, grocery, and ecommerce space," Fitch's Clar said. Rite Aid gift cards and returns State of play: Rite Aid says it will no longer honor its store gift cards or accept any returns or exchanges starting June 5. The company also has stopped issuing Rite Aid Rewards points on qualifying purchases. It says accrued points and BonusCash will expire per the standard terms and conditions. Is my Rite Aid closing? See the initial closing list An initial closing list in court documents lists 47 closing stores. What's next: More store closings are expected and possible sales of locations. "There are wildcards, such as Amazon, which could at least buy the Seattle native Bartell Drugs subsidiary. But this is a long shot," said Neil Saunders, managing director of GlobalData. "The most likely outcome is that other chains will cherry pick Rite Aid stores," Saunders said. "Some of these are in rural locations where the chain has more of a captive audience. However, this route would not necessitate a wholesale purchase of the brand or its assets."
Yahoo
07-05-2025
- Business
- Yahoo
Rite Aid files for bankruptcy 8 months after exiting Chapter 11
This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter. Dive Brief: Rite Aid filed for bankruptcy on Monday, with plans to sell itself, and has already had 'meaningful interest' from potential national and regional strategic buyers. Stores will remain open and operating, but plans are to liquidate all locations unless a buyer comes forward, according to court documents. The drugstore retailer has secured commitments from some existing lenders to access $1.94 billion in new financing. That plus cash from operations is expected to be sufficient funding during the sale and court-supervised Chapter 11 process. A sale is imminent, with an auction set for May 14 for the pharmacy assets and June 20 for other assets, per court documents. The company just exited a previous bankruptcy in September, after filing less than two years ago, emerging as a private business with about $2 billion less debt plus some $2.5 billion in exit financing. Dive Insight: Rite Aid said it never really had a chance to right itself following its 2023 bankruptcy, saying many vendors failed to live up to agreements to ease their terms. Moreover, the company faced unforeseen liquidity issues when, instead of the $166 million it expected, it could only – months later – secure $66.75 million, per court filings. The empty shelves meant fewer impulse purchases and lower front-of-store sales, and the strained finances meant the retailer struggled to replenish assortments. 'In other words, the Company became trapped in a vicious cycle, where tightening liquidity led to empty store shelves, and vice versa,' Marc Liebman, managing director at Alvarez &Marsal North America who is serving as Rite Aid's chief transformation officer, wrote to the court on Tuesday. At its 2023 filing, Rite Aid operated more than 2,100 stores in 17 states and employed more than 6,100 pharmacists and 45,000 total employees. During that bankruptcy, it sold or wound down about 800 underperforming stores. Since exiting that process, Rite Aid has closed another 29 underperforming locations. The company has now entered into purchase agreements of prescription files at 60 stores, and plans 50 closures without prescription sales. Finally, there are 275 stores 'that have or will have asset purchase agreements for regional transactions in process,' per court documents. At this point, Rite Aid operates 1,277 stores and three distribution centers in 15 states and employs about 24,500 people.
Bloomberg
06-05-2025
- Business
- Bloomberg
Rite Aid Blames Failed Turnaround on Empty Store Shelves
Rite Aid blamed its failed turnaround and swift return to bankruptcy on its inability to keep store shelves stocked and a shift by its lower-income customers purchasing household goods at cheaper competitors. Store shelves were understocked because Rite Aid anticipated having access to $166 million from replacement credit facilities, along with other sources of cash. But certain lenders 'delayed and in some cases walked away' from their earlier assurances to the company about the terms and timing of the facilities, Rite Aid adviser Marc Liebman said in a Tuesday court filing.
