Rite Aid is taking significant steps in its ongoing bankruptcy proceedings by planning to close 53 additional stores across nine states in the U.S. These closures are part of a broader strategy to reduce expenses and streamline operations in the face of financial challenges. The affected states include California, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Virginia.
This decision follows the company's bankruptcy filing in October, aimed at addressing its substantial debt burden. The filing was strategic, focusing on shutting down underperforming stores and divesting non-core business units to improve financial health. Initially, Rite Aid announced the closure of 154 stores and has continued to expand this list throughout the bankruptcy process.
In a recent development, a bankruptcy judge granted Rite Aid permission to start the voting process on a restructuring plan. This plan proposes turning over most of the company's equity to its bondholders, though it also leaves room for a potential sale of the company. This critical phase of restructuring highlights the bondholders' significant influence over the company's future.
Moreover, the restructuring plan is unique as it restricts voting rights to the bondholders, underscoring their role as the primary decision-makers in this process. This approach indicates the strategic importance of the bondholders' support for Rite Aid's recovery plan.
Despite the financial turmoil, Rite Aid continues to address legal issues that could impact its restructuring. The company is finalizing key settlements, including one related to a Justice Department investigation into its opioid sales practices. These legal matters are crucial to the company’s efforts to stabilize and move forward.
Rite Aid spokespersons have communicated through various channels, including an email to FOX Business, that the company has not publicly disclosed the list of specific store closures. Instead, they have informed the court about the underperforming stores they plan to close, which is part of their strategy to reduce rental expenses and enhance overall financial performance.
As Rite Aid moves towards a resolution, the company is scheduled to seek final court approval for its restructuring on April 22. Earlier this year, it received approval to sell its pharmacy benefit company, Elixir, marking another significant step in its strategic overhaul.
Since opening its first full-service pharmacy in 1962 in Scranton, Pennsylvania, Rite Aid has grown into a major pharmacy chain with approximately 1,700 retail locations and 45,000 employees across 16 states. This restructuring represents a pivotal effort to sustain its legacy and continue serving communities nationwide.
