Big Pharmacy Crash: Walgreens Closing Stores and Rite Aid Declares Bankruptcy
Both retailers are struggling financially, prompting them to take action.
Your local pharmacy is always there when you're under the weather or need to pick up your prescription refill. If you're a regular, you might even be on a first-name basis with the pharmacist, trusting their recommendations for cold and allergy meds when you need them. But if you rely on certain chains, you may soon be looking for a new place to shop: Big-name pharmacies are now facing a reckoning, with Walgreens closing stores and Rite Aid declaring bankruptcy. Read on to find out more about the issues plaguing both drugstore chains.
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Walgreens failed to meet financial expectations.
Walgreens reported signs of trouble last week, announcing plans to cut $1 billion in costs in 2024, Axios reported.
The company failed to meet Wall Street's expectations for the fiscal year that ended Aug. 31, losing $6.9 billion, which is partially due to $6.8 billion in opioid-related claims and litigation, according to Reuters.
Walgreens has been dealing with different factors impacting business, including a drop in the sale of COVID-19 products, weak prescription drug demand, staff walkouts, and lower sales of consumer health merchandise due to ongoing inflation, Reuters reported.
"Our performance this year has not reflected [Walgreens Boots Alliance] strong assets, brand legacy, or our commitment to our customers and patients," interim CEO Ginger Graham said in a statement, per Reuters.
RELATED: Your Walgreens Pharmacy May Be Closed This Week—Here's Why.
The pharmacy giant is closing stores and bringing workers back into the office.
In an ongoing effort to cut costs, Walgreens is closing unprofitable stores and healthcare clinics.
While the company specified that 60 clinics will close, it is unclear how many retail stores will shutter in the next year. In June, however, the company did announce plans to shut down 150 locations in the U.S.
According to Axios, in addition to closing stores, Walgreens is also adjusting store hours, stopping all nonessential projects at headquarters, requiring all remote workers to be back at the office in November, investing in online micro-fulfillment centers, and reducing excess inventory.
Best Life reached out to Walgreens for comment, and will update the story with its response.
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Rite Aid is in trouble, too.
While things are looking grim for Walgreens, Rite Aid is not faring well either. On Oct. 15, the company filed for Chapter 11 bankruptcy protection, confirming that lenders are providing $3.45 billion for support during reorganization, per a company press release.
"Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company," new CEO Jeffrey S. Stein, who was appointed as part of the restructuring, said in the press release.
Stein continued, "With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy. In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on—now and into the future."
According to CNN, Rite Aid is facing its own expensive lawsuits for allegedly filling unlawful prescriptions for controlled substances, including opioids, which compounded the need for a bankruptcy filing.
Rite Aid is also closing stores, but it hasn't confirmed a number.
As part of the bankruptcy filing, Rite Aid also confirmed that it would "accelerate the Company's store footprint optimization plan" and close underperforming stores. The company noted that this will reduce rent expenses and strengthen financial performance.
Currently, there are 2,100 remaining Rite Aid locations in 17 U.S. states, but it's not yet clear how many of these will be shuttered or when.
In a statement provided to Best Life, the company said, "Rite Aid regularly assesses its retail footprint to ensure we are operating efficiently while meeting the needs of our customers, communities, and associates. In connection with the court-supervised process, we intend to close certain underperforming stores to further reduce rent expense and strengthen overall financial performance."
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