Rite Aid is once again on the verge of bankruptcy, less than a year after exiting its last one, and is now preparing to sell off parts of the company while closing down unsold locations.
Key Facts:
- Rite Aid is preparing to file for its second bankruptcy in less than a year.
- The company is seeking a debtor-in-possession loan to stay afloat during the process.
- It plans to sell regional store groups and wind down those that don’t sell.
- Rite Aid exited bankruptcy in September 2024 after cutting $2 billion in debt.
- The company continues to struggle with cash flow due to inflation and high interest rates.
The Rest of The Story:
Rite Aid Corp. is preparing to break itself apart and potentially close its remaining stores.
Sources familiar with the matter say the company is pursuing a debtor-in-possession loan to stay open while it finds buyers for parts of its business.
Any stores that aren’t sold are expected to be shut down completely.
Guggenheim Securities has been brought in to help manage the effort.
Rite Aid has not commented on the situation, and Guggenheim declined to offer a statement.
This collapse comes after Rite Aid exited Chapter 11 in September 2024.
That process involved closing hundreds of stores and cutting $2 billion in debt.
The company also resolved lawsuits tied to the opioid crisis and secured $2.5 billion in exit financing.
Yet despite these efforts, financial problems have continued to mount.
In March, the company entered talks with lenders to access more funds to replenish inventory.
This came with promises to meet performance benchmarks and close even more locations.
The latest struggles put Rite Aid in line with other struggling retailers, including Joann Inc. and Party City, which have also filed for bankruptcy within the last two years.
Commentary:
Drugstores are no longer a critical part of modern American life.
With Walmart, Costco, and grocery chains offering pharmacy services, it’s hard to justify a special trip to Rite Aid.
The prices aren’t better, the selection isn’t broader, and the convenience doesn’t compare.
People now buy personal care products, household items, and over-the-counter medicine during their regular shopping runs or online.
Even popular features like Thrifty ice cream are no longer enough to attract foot traffic.
What used to be a neighborhood staple now feels redundant in a world of one-stop superstores and two-day shipping.
The writing has been on the wall for years, and Rite Aid’s continued downfall only confirms what shoppers already know: the era of the drugstore is ending.
The Bottom Line:
Rite Aid is preparing for a second bankruptcy in under a year.
It plans to sell some stores and close the rest, citing ongoing financial issues.
Despite shedding debt and closing hundreds of locations last year, the company couldn’t turn things around.
The traditional drugstore model is no longer working in today’s retail environment.
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