Rite Aid to close more stores
Embattled pharmacy giant files for bankruptcy protection
Pharmacy giant Rite Aid is expected to close more stores after it filed for bankruptcy protection late Sunday night.
The embattled pharmacy, which has 102 stores in New Jersey and 22 stores in Monmouth and Ocean counties, recently closed a store at 1726 Route 37, near Vaughn Avenue, in Toms River late last month. Other stores closed recently in Denville and Morristown.
In a statement on Sunday, Rite Aid said it will close additional poor performers.
“The court-supervised process provides Rite Aid with legal tools to accelerate our footprint optimization in an efficient and orderly manner,” said Jeffrey S. Stein, Rite Aid’s new chief executive officer and chief restructuring officer. “We look forward to working closely with our landlords to determine the best path forward for each of our stores.”
Of the 154 stores on the Rite Aid’s initial list of locations it plans to close and hold store closing sales, 12 are in New Jersey, according to court documents. They are:
• 4057 Asbury Ave., Tinton Falls
• 431 Haledon Ave., Haledon
• 35 Mill Road, Irvington
• 1636 Route 38, Lumberton
• 773 Hamilton St., Somerset
• 1434 S. Black Horse Pike, Williamstown
• 3 Marshall Hill Road, West Milford 210 Bridgeton Pike, Mantua
• 108 Swedesboro Road, Mullica Hill
• 2370 Route 33, Robbinsville
• 1726 Route 37 E., Toms River (already closed)
• 86-B Lacey Road, Manchester Rite Aid said it would work to make sure customers of impacted stores have continued access to health care services, whether at another Rite Air or a nearby pharmacy and will work to transfer prescriptions so there is no disruption.
The pharmacy giant filed for bankruptcy late Sunday night, listing nearly $8.6 billion in debts and $7.6 billion in assets, according to court filings. The company has received a commitment for $3.45 billion in new financing from some of its lenders
Bankruptcy is Rite Aid’s only “sensible option,” analyst Neil Saunders, managing director of GlobalData, said in email. “Unfortunately, bankruptcy may see more shop closures which, unless other chains step in to acquire store assets, will leave some holes in the pharmacy landscape and potentially runs the risk of pharmacy deserts opening up in some locations,” he said.
“On the retail and pharmacy side, there is still a need for Rite Aid and the business has a proposition that is far from irrelevant — especially across many of the rural areas it serves.”
But Rite Aid has suffered with combined net losses of $2.9 billion over the last six years, Saunders said. It also has $3.3 billion of long-term debt on its balance sheet.
“Against this financial backdrop, Rite Aid simply isn’t a viable entity: it is basically running on the fumes of cash it generates in the day-to-day business,” Saunders said.
Rite Aid also faces a crisis related to hundreds of lawsuits alleging that it oversupplied prescription painkillers.
“The pending lawsuits for opioid settlements, which by our estimates could end up costing the company around $1 billion, are simply the coup de grâce,” Saunders said. “Rightly or wrongly, Rite Aid cannot afford either the cost of the suits nor any settlement.
Meanwhile, the company’s sales have continued to decline, a drop of 4.4% in the most recent quarter as consumers spent less and shopped around for deals, he said.
“While Rite Aid should be able to emerge from bankruptcy, unless it is bought by a larger firm, it will still have struggles,” Saunders wrote.