Rite Aid filed for Chapter 11 bankruptcy protection Sunday and disclosed plans to close additional “underperforming stores.”
The financially troubled drugstore chain, which has been losing money for several years now, operates more than 2,200 drugstores across 17 states. Already, Rite Aid in July confirmed the closure of another 25 stores in its fiscal first quarter that ended June 3. That disclosure was made during a call to discuss quarterly earnings and an updated financial outlook that projected wider losses for fiscal 2024. Those closures are on top of the 145 unprofitable stores that Rite Aid announced in 2021 that closed from late 2021 throughout last year.
With the bankruptcy filing and coming restructuring, a yet to be determined number of additional stores will close.
“Rite Aid regularly evaluates its store portfolio to ensure it is operating efficiently while meeting the needs of its customers, communities and associates,” Rite Aid said in a statement Sunday night. “In connection with the court-supervised process, the company will continue assessing its footprint and close additional underperforming stores. These efforts will further reduce the Company’s rent expense and are expected to strengthen its overall financial performance.”
In addition, Rite Aid said the drugstore chain has received a commitment for $3.45 billion in “new financing from certain of its lenders” that is expected to provide “sufficient liquidity to support the company throughout this process.”
Sunday’s news from Rite Aid also included the appointment of a new chief executive officer in Jeffrey S. Stein, who also takes the position of Chief Restructuring Officer and joins the drugstore chain’s board of directors, “effective immediately,” the company said.
Stein succeeds Elizabeth “Busy” Burr, who has been Interim CEO of Rite Aid since January 2023 when she replaced Heyward Donigan. Burr remains a Rite Aid board member.
In Stein, Rite Aid said it hired an executive with more than three decades of experience as an executive at both public and private companies,” citing his “particular expertise in supporting companies that are driving meaningful business transformations and undergoing financial restructurings.” Rite Aid said Stein previously served as “Chief Executive Officer and Chief Restructuring Officer of GWG Holdings, Inc. and as Chief Restructuring Officer of Liberty Steel Group Holdings Pte. Ltd., Whiting Petroleum Corporation, Philadelphia Energy Solutions, LLC and Westmoreland Coal Company.”
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