Rite Aid Corp. has informed employees it intends to file for bankruptcy protection a second time, less than a year after completing a previous restructuring effort. The pharmacy chain cited an inability to secure additional capital necessary to continue operations.
Chief Executive Officer Matthew Schroeder communicated the decision in a letter to employees, which stated the company plans to seek Chapter 11 protection. This development follows the company's earlier restructuring, which was completed less than 12 months ago.
The planned bankruptcy filing comes as the company also announced job cuts. Positions at Rite Aid's corporate offices in Pennsylvania are expected to be eliminated as part of the company's efforts to address its financial challenges.
Reports indicate the company may consider selling off individual stores and closing others. Rite Aid currently operates approximately 1,200 locations following the shuttering of hundreds of stores during its previous bankruptcy proceedings, which reportedly saved about two billion dollars through cost-cutting measures. Read More about previous store closures.
The challenges facing Rite Aid are reflective of broader issues impacting the retail pharmacy sector. Larger chains, including CVS and Walgreens, have also announced plans to close hundreds of locations in the coming years as they adapt to changing market conditions.
The struggles across the industry stem from several factors. These include the effects of a challenging economy, inflationary pressures impacting consumer spending, and changes in reimbursement rates from insurance companies.
Additionally, pharmacies face rising rates of retail theft, difficulties in staffing locations, and increasing competition. Online retailers and large format stores like Walmart have expanded their pharmacy services, drawing customers away from traditional drugstores, according to analysis reported by CNBC.
Rite Aid's decision to pursue another bankruptcy filing highlights its ongoing struggle with debt and low cash flow, leading to the current plan as reported by Bloomberg. The company's future operating footprint remains uncertain as it navigates this second financial restructuring attempt, reports indicate.
