Topline
Drugstore chain Rite Aid plans to shut down hundreds of stores in bankruptcy, according to the Wall Street Journal, as the company figures out how to address billions of dollars’ worth of debt and a swath of opioid-related lawsuits.
Rite Aid has already closed down unprofitable stores before, shuttering more than 100 last year. … [+]
Key Facts
Rite Aid has proposed to close about 400 to 500 of its more than 2,100 stores in bankruptcy and either sell them or allow creditors to take control of the remaining operations, the Journal reported, citing people familiar with the bankruptcy proceedings.
There is a preference among a group of bondholders to liquidate an even higher number of stores, though the company and the bondholders are still in the process of landing on a final number, according to the Journal.
The company has more than $3.3 billion in debt and is looking down the barrel of more than a thousand federal lawsuits alleging it oversupplied opioids, according to multiple reports.
Contra
“Given the conversations remain ongoing, no decisions have been made at this time and we are focused on reaching an agreement with our financial stakeholders that will make Rite Aid stronger,” a Rite Aid spokesperson told Forbes.
Key Background
Rite Aid’s stores have been unprofitable in recent years. The company said last year it would close 145 stores as part of cost-cutting measures meant to help it compete with the likes of Walgreens and CVS. Rite Aid reported a fiscal first quarter loss of $306.7 million, adding it expects losses next year to be worse than initially anticipated, with a net loss “expected to be between approximately $650 million and $680 million.”
Big Number
97%. That’s the percentage drop in share price Rite Aid has suffered since trading at more than $26 at the start of 2021. It has traded below $1 for nearly one month now.
Further Reading
Rite Aid Plans to Shut Down Hundreds of Stores in Bankruptcy (Wall Street Journal)
Is Rite Aid at risk of bankruptcy? What a Chapter 11 filing would mean for shoppers (USA Today)
Source: https://www.forbes.com/sites/antoniopequenoiv/2023/09/22/rite-aid-proposes-closing-about-a-quarter-of-its-stores-in-bankruptcy-report-says/