No matter where you are in the U.S., you've likely come across a number of "Going Out of Business" signs or newly abandoned buildings over the past two years. The COVID pandemic has turned store closures into an epidemic of its own, with supply chain issues, changing shopper patterns, and overall financial uncertainty exacerbating the problem. In 2020, retailers such as Lord & Taylor and Stein Mart were forced to shutter all of their locations permanently, and 2021 brought about store closures from companies like Bed Bath & Beyond and Disney. But the damage is far from over. Another retailer has just announced that it's planning to close nearly 150 stores in 2022. Read on to find out what popular chain is paring down its U.S. locations.
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Drugstores have been struggling over the past few years.
iStockDespite being a pivotal player in the fight against COVID through vaccinations and testing, drugstores have struggled amid the pandemic with product shortages, reduced store hours, cancelled customer appointments, and even store closures. According to The New York Times, there are a number of reasons for this. One of the major issues right now is a pharmacist labor shortage, which has been made worse by "intense strain as their jobs shift from filling prescriptions and counseling patients to administering COVID-19 vaccines and tests, handing out masks and dealing with increasingly angry customers," the newspaper explained.
But some experts also say that drugstore companies have an added complication contributing to their ongoing troubles. Walter Schubert, PhD, a professor of finance at La Salle University, told WLVR in Bethlehem, Pennsylvania, that some consumers have stopped going to physical pharmacies in favor of ordering their prescription medications online.
"People are finding cheaper ways to get their drugs online," Schubert said. "Governments negotiate the price of the drugs in other countries, we do not. So our prices are much higher."
And now one major drugstore is closing nearly 150 locations.
iStockThese struggles have hit one of the most popular drugstore chains: Rite Aid. On April 14, the company revealed that it is planning to close 145 stores this year. That is 82 more Rite Aid locations than shoppers were already expecting to lose, after the company previously announced in Dec. 2021 that it would be closing locations in 2022. According to the new announcement, Rite Aid said it is getting rid of "unprofitable stores" in order to help "significantly reduce costs" for the company.
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The company said it is working "amid continuing challenges" of the COVID pandemic.
ShutterstockAlongside the added store closure announcement, Rite Aid also released company earnings for its last fiscal year, which ended in Feb. 2022. According to the report, Rite Aid experienced a net loss from continuing operations of $389.1 million in its last quarter. But the drugstore chain's report still indicates some progress, as Rite Aid's full year revenue rose from $525 million to $24.6 billion—largely aided by a 12 percent increase in its pharmacy sales.
"We exceeded our 2022 plan amid continuing challenges of the COVID-19 pandemic. As we look forward to the year ahead, we are ready and energized to compete in a new post-pandemic normal," Heyward Donigan, president and CEO, said in a statement. "We demonstrated the important role that pharmacists play in the everyday health of our customers and are well positioned to grow in a trillion-dollar pharmacy market through our continued leadership as a full-service pharmacy company."
Another major drugstore chain is closing stores this year.
ShutterstockRite Aid is hardly the only drugstore chain having to pare down its operations in 2022. In Nov. 2021, CVS announced that it plans to close around 300 stores this year, starting in the spring. That's only a fraction of the 900 locations CVS expects to shutter by 2023. This will reduce the company's nearly 10,000 U.S. stores by roughly 9 percent.
According to a release from company, CVS said it has been "evaluating changes in population, consumer buying patterns and future health needs to ensure it has the right kinds of stores in the right locations for consumers and for the business," and the store closures play a part in this initiative. The drugstore chain still plans to have a large physical presence, but it is shifting to more of a digital strategy.
"Our retail stores are fundamental to our strategy and who we are as a company," CVS CEO Karen Lynch said in a statement. "We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence."
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