Bankruptcy Could Force Major Retailer to Close 500 Stores
Why: The chain faces a variety of state and federal lawsuits that it illegally filled prescriptions for controlled substances, notably opioids. The company faces over 1,000 lawsuits.
Store Closures: Rite Aid has said they will “accelerate the company’s store footprint optimization plan.” That’s corporate speak for closing a lot of stores. By entering bankruptcy, Rite Aid is able to get out of leases it had previously signed. Typically companies use this opportunity to shed their least performing stores. The company has faced declining sales due to heavy competition from CVS.
The company did not say how many stores it will close. The Wall Street Journal has reported the company has already closed more than 200 stores over the past two years. 167 leases have already been rejected through bankruptcy. Some speculate over 500 stores could close as a result of bankruptcy.
Rite Aid was founded in Scranton, PA in 1962. It has reported negative net income every year since 2019 and has over $3.3 billion in long term debt plus the liability exposure from multiple lawsuits.