Rite Aid pharmacy chain files for bankruptcy

He also announced the appointment of Jeffrey S. Stein as CEO, chief restructuring officer and member of the company’s board of directors.

Responding to the filing, analyst Neil Saunders, chief executive of GlobalData, said in an email that bankruptcy was the only reasonable option for Rite Aid and that it was simply not a financially viable entity.

Filing Chapter 11, also known as reorganization, allows a business to remain in business while restructuring its debts through a court-monitored process. Rite Aid had about $3.3 billion in long-term debt in June, when it reported its first-quarter financial results.

She is also a defendant in several lawsuits regarding her role in filling opioid prescriptions. In 2017, more than 1,000 opioid-related cases were consolidated in the U.S. District Court for the Northern District of Ohio. In March 2013, the Justice Department filed its own complaint, alleging violations of the False Claims Act and the Controlled Substances Act.

U.S. sues Rite Aid, saying it ignored warning signs about opioid prescriptions

Rite Aids’ problems aren’t limited to opioid-related litigation. Like many retailers, it has been hit hard by shrinking inventory caused by something other than sales. Chief Financial Officer Matthew C. Schroeder told investors during the company’s second-quarter earnings call that losses were about $9 million higher than last year. He added that the company had closed stores in areas with high shrinkage.

Rite Aid closed 145 stores last year and another 25 in the second quarter, according to its latest earnings call. Schroeder told investors the company regularly evaluates store performance and reviews lease agreements. He added that the company plans to close more stores in the second half, but did not provide a specific figure.

This is certainly something that we will continue to look at as we think about how we can generate as much profitability as possible while maintaining presence in communities and providing access to our customers and our communities, a Schroeder said.

Bankruptcy could lead to more store closings, Saunders predicted, leading to the risk of pharmaceutical deserts in some areas.

Rite Aid joins a handful of other retailers that have filed for Chapter 11 bankruptcy this year, including Davids Bridal, Christmas Tree Shops, Tuesday Morning and Party City. One of the hottest channels to disappear this year was Bed Bath & Beyond, which announced plans in April to lay off staff and close 360 ​​stores, as well as 120 Buy Buy Baby stores.