Rite Aid Corporation is a drugstore chain headquartered in Philadelphia, Pennsylvania. Rite Aid began in 1962 with the opening of its first store by Alex Grass as Thrift D Discount Center in Scranton, Pennsylvania. After several years of expansion, Rite Aid adopted its current name and went public in 1968. The New York Stock Exchange trades Rite Aid under the symbol “RAD.” The company was ranked 148th on the Fortune 500 list of the largest companies in the United States based on total revenue. In January 1999, General Nutrition Corporation (GNC) and Rite Aid formed a partnership, bringing GNC mini-stores within Rite Aid pharmacies. In June 1999, Rite Aid customers could place medical prescription orders online for same-day, in-store pickup through a partnership with drugstore.com.
In June 2019, Amazon announced that customers could pick up their purchases at designated counters inside more than 100 Rite Aid stores across the United States. The counter is a new service launched in the United States after being successful in the United Kingdom with the Next clothing chain and in Italy with Giunti Al Punto Librerie, Fermo point, and SisalPay stores. Rite Aid collaborated with Homeward, a rural home care startup, in May 2022. Medicare-eligible customers will be directed to Homeward’s clinical services and have access to Homeward mobile care units as a result of this collaboration.
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Is Rite Aid Struggling in Business?
Rite Aid announced on April 14, 2022, that it would close 145 “unprofitable shops” during the year. This revised a December 2021 notification outlining plans to close 63 locations.
Despite inflation fueling revenue gains for businesses across the economy, Rite Aid reported a 3.5% drop in sales in the second quarter, owing in part to a decrease in revenue from COVID vaccines and testing, as well as store closures.
According to the Sacramento Business Journal, two Rite Aid stores in the greater Sacramento area have closed. A Rite Aid in Roseville also closed its doors on May 5, 2022, and one of the medicine stores in East Sacramento closed on May 3, 2022. According to the announcement from April, the closures are timed to the company’s efforts to “substantially decrease expenditures.”
In addition, the release included financial results for the preceding fiscal year, which ended in February 2022. These results revealed a net loss from continuing operations of $389.1 million in the most recent quarter alone. The COVID-19 pandemic is still posing issues for Rite Aid, but Heyward Donigan, president and CEO says the company is “ready and energized” to move forward. Despite these losses in the fourth quarter, the corporation made gains for the entire fiscal year, increasing revenue from $525 million to $24.6 billion, primarily because of a 12 percent increase in pharmacy sales.
Rite Aid closing stores
According to the Business Journal, Rite Aid outlets in Sacramento have already lost four of their locations this year in addition to the ones that were shuttered during May.
On February 28, a Rite Aid in the city’s downtown district closed; on March 3, one in midtown did likewise. Rite Aid’s amended notification from April led to the closure of a location in East Sacramento on March 28 and a Cameron Park location on April 6. However, Rite Aid’s public relations director, Terri Hickey, confirmed that additional Sacramento-area Rite Aid locations are currently secure.
According to Hickey’s email to the Business Journal, there aren’t any upcoming closures for this area. These and other stores are among the 145 that will be shut down between the fall of 2021 and June of this year.
Reason for the closure
There are too many pharmacies in the nation, cautions Mahmud Hassan, a Rutgers University Business School professor and an authority on pharmacies. Hassan stated that Walgreens, CVS, Amazon, Walmart, and mail-order services are among the rigid competitors that Rite Aids must contend with. They need to make more sales.
In a challenging first quarter of fiscal 2023, Rite Aid Corp. reported a rising net loss and falling revenues. Rite Aid attributed the rise in an adjusted net loss primarily caused by higher facility exit and impairment charges driven by its previously announced store closure decisions and a decrease in adjusted EBITDA. An increase in the gain on the sale of assets brought on by the script file sales of a few store closures partially offset these items. Due to the increased use of more expensive medications at its Elixir pharmacy benefit management service, the business has upped its view for fiscal 2023 revenues. It is maintaining its guidance for adjusted EBITDA. In fiscal 2023, total revenues are anticipated to range between $23.6 billion and $24 billion.
A net loss of between $246.3 million and $203.3 million is anticipated. As a result of higher impairment costs for shuttered locations and higher interest expenses due to recent and anticipated interest rate rises throughout the year, Rite Aid claims that its expectations for net loss have increased.
The adjusted net loss per share is anticipated to range between $(1.19) and $ (0.66). With a focus on investments in digital capabilities, technology, prescription file purchasing, distribution center automation, and retail remodels, capital expenditures are anticipated to total around $250 million. In the fiscal year 2023, Rite Aid anticipates producing a positive free cash flow.
Conclusion
Rite Aid is not the only company dealing with similar issues: Starting this spring, CVS Pharmacy, Inc will also be closing locations. The pharmacy chain stated in November 2021 that it would close 300 locations in 2022 and 900 outlets by 2023. According to a press release from the company, the shop claimed it would focus on a digital approach while continuing to have a significant physical presence.
