Rite Aid said it will close 63 stores in a cost-cutting move designed to help the pharmacy chain be more competitive.
Rite Aid, which has struggled in recent years to compete with larger rivals Walgreens, CVS Health and Walmart pharmacies, said Tuesday it is “conducting a rigorous assessment of its store base and has implemented a store closure program.” The company didn’t disclose locations of the closures that began in November.
“The program’s primary focus is to reduce costs, drive improved profitability and ensure that Rite Aid has a healthy foundation to grow from, with the right stores in the right locations, for the communities it serves and for its business,” Rite Aid said in the announcement, which was part of the company’s earnings report for its fiscal third quarter ended November 27.
Pharmacy reimbursement pressures and competitive threats like online retailer Amazon’s push into pharmacy are forcing drugstore chains to look at new ways to reinvent their brick-and-mortar drugstores, selling new products and adding more healthcare services.
Rite Aid chief executive officer Heyward Donigan said the store closures are a first phase. “We have identified an initial 63 stores for closure that is expected to provide an annual EBITDA benefit of approximately $25 million,” Donigan said.
Rite Aid said it has more than 2,400 retail pharmacy locations across 17 states. By comparison, CVS and Walgreens each have more than 9,000 stores.
Rite Aid has been losing money in recent quarters and its fiscal third quarter was no different. On Tuesday, the company reported net loss from continuing operations of $36.1 million, or $0.67 loss per share. Meanwhile, revenues from continuing operations were up slightly to $6.23 billion for the quarter compared to $6.12 billion in the prior year’s quarter.
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