Say Goodbye To Your Local Rite Aid, Shutdown Imminent
The last year was a tough one for nearly every industry. Many major companies struggled with poor performance, sales dips, and labor woes. And the latest news from Rite Aid suggests the pharmacy will close out the year with even more problems.
Rite Aid has failed to perform well against its competitors (CVS and Walgreens) for the last few years. And 2022 was no different. After a disappointing start to the year, the company decided to take some drastic steps.
In April, Rite Aid announced it would close 145 stores nationwide. According to the company, those stores were all unprofitable. Shuttering them was a step to reduce overall company costs.
Rite Aid has systematically closed those unprofitable locations throughout the year. Unfortunately, that wasn’t enough to help the struggling drugstore chain. Last Wednesday, its latest quarterly financial report hit news outlets.
And the revenue loss is shocking. It totaled over $67 million. However, that was not even the worst news.
According to Forbes, Rite Aid “is now projecting greater losses for its fiscal 2023 than it projected just three months ago.” The executive vice president and chief financial officer of Rite Aid, Matt Schroeder, held a call Wednesday to discuss the dismal financial performance. He said, “I think what I would tell you is there is an opportunity to close more stores.”
The company had 2,324 stores at the close of the third quarter. But Schroeder did not offer any hints as to how many stores might close. However, company executives did not believe they would come close to the number already closed this year.
“It’s not nearly the size of the opportunity that we had this year,” Schroeder said. “So, it’s on a much smaller scale because we have done a pretty good job in the latest last store closure program of really pruning a lot of the unprofitable stores or at least unprofitable even with leases and drain in out of the fleet. So smaller than this year.”
However, if the company still posted a loss of $67 million after closing 145 stores, it has more work to do. Investors are none too happy with the company’s performance either. The stocks saw a $1.23 per share loss.
But hopefully, the adjustments to the 2023 forecast will help smooth some of the disgruntled waters. The company now projects total annual revenue to fall between $23.7 and $24.0 billion. And according to Nasdaq, “Adjusted net loss per share is expected to be between $2.18 and $1.78.”
While that does not sound promising, it is far better to exceed forecasts than further disappoint investors. So Rite Aid hopes to set itself up to meet or exceed expectations. But whether or not they can accomplish that will remain to be seen.
The company also plans to take more actions than just closing underperforming stores. It will invest significantly in capital improvements, to the tune of $225 million. Doing so may help Rite Aid finally compete with the big dogs like CVS and Walgreens.
