Rite Aid lost more than $1 billion before filing for bankruptcy
A Rite Aid store in Kingston, New York, on May 15, 2023.
Angus Mordant | Bloomberg | Getty Images
Rite aid The failed drugstore chain lost more than $1 billion in the months leading up to bankruptcy, the failed drugstore chain announced Wednesday regulatory filingas it warned investors it may not be able to keep its business afloat.
The warning, which came three days after Rite Aid filed for bankruptcy protection, was contained in a late quarterly report that showed the company posted more losses in the 13 weeks ended Sept. 2 than in the entire previous fiscal year.
During the quarter, Rite Aid reported revenue of $5.65 billion and a net loss of $1.02 billion, compared to $5.9 billion in revenue and a net loss of $331 million in the year-ago period .
Rite Aid’s cost of goods sold and selling, general and administrative expenses were in line with prior quarters. But interest expense rose to $72.7 million from $52.5 million in the same period last year. The company also had to record $310.8 million in facility closure and impairment charges, most of which came from write-downs of assets at locations the company plans to close or relocate, the filing said.
The drugstore has suffered in recent years under the weight of declining sales, long-term debt and lawsuits alleging it oversupplied painkillers and contributed to the country’s opioid epidemic.
On Sunday, the company filed for bankruptcy protection in New Jersey after it was left with no other choice due to a “confluence of operational and financial factors,” court papers say.
According to court documents, Rite Aid has about $4 billion in debt and pays about $200 million in interest annually. As a result of these payments, Rite Aid was unable to execute its turnaround strategy as of September 2 with approximately $93 million in cash.
The company is also too small to compete with its better-funded competitors CVS And Walgreensboth of which rely on healthcare models, while Rite Aid remains true to its focus on pharmacies and retail.
Rite Aid warned that its store footprint will shrink even further as it plans to close underperforming stores as part of its bankruptcy. The company has sought court approval to close at least 154 stores in the near future and said more could be added.
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