Rite Aid is closing 63 stores as the retailer aims 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,” according to a company statement. The retailer is coming off a modestly successful Q3 2022, with retail pharmacy segment revenues up 7.9% and same-store sales up 4.4% in in Q3 2021, but the company experienced an overall net loss of $36 million during the quarter.
Rite Aid expects its store closures to have positive results in the long run. The 63 stores set to be shuttered will result in annual cost savings of approximately $25 million, which could help offset a projected overall net loss of $189 million to $230 million for fiscal 2022.
The retailer’s pharmacy growth is being offset by incremental payroll costs to support COVID immunizations, increases in bonus expense for store, field and corporate associates and increases in worker compensation costs. These costs were in line with the challenges the entire industry is facing due to the labor crunch.
“Despite challenges in the labor market, our pharmacists and store teams were able to meet the unprecedented volumes for COVID and flu immunizations, COVID testing and other clinical services, which clearly demonstrates our work to free up capacity is paying off,” said Heyward Donigan, President and CEO of Rite Aid in a statement.
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Additionally, enrollment in Elixir Insurance membership has declined, resulting in a 10.8% pharmacy services revenue drop in Q3 2021, but Rite Aid’s retail side is still well-positioned for the future. The retail side has partnered with DoorDash and Shipt to offer same-day delivery, while Chief Retail Officer Andre Persaud is designing new in-store experiences and operations processes under the retailer’s RxEvolution strategy to ensure customers have a great experience no matter how they shop.
