Bankrupt retail chain closing 100s of store locations

The drugstore retail sector has faced hundreds of store closings over the last four years, as retailers close underperforming stores and sometimes dump locations in bankruptcy filings.

Huge drugstore chain CVS (CVS) in 2021 revealed it would close 900 of its nearly 9,900 stores to reduce costs and cut losses, closing 300 locations each year in 2022, 2023, and 2024.

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The company said it would consider several factors before closing a store, such as maintaining access to pharmacy services, local market dynamics, population shifts, a community’s store density, and ensuring there are other geographic access points to meet the needs of the community.

Drugstore chain Walgreens, which operates about 8,600 stores, in 2024 said it would close 1,200 underperforming stores over a three-year period, with 500 closings planned in fiscal year 2025, as part of its out-of-court restructuring plan.

The retailer, which in March agreed to be sold to private equity firm Sycamore Partners, said it would close locations with negative cash flows, underperforming stores where it owns locations, and ones with lease expirations coming due in the next few years to reduce the impact of dark rent.

A more recent report said that the drugstore chain might close even more stores, possibly one-quarter of its locations.

Smaller pharmacies file for bankruptcy

Last year, several small drugstore chains filed for bankruptcy, including Eastern Kentucky-based Rx Discount Pharmacy, which operated about seven pharmacy and healthcare businesses. The pharmacy chain on May 1, 2024, filed for Chapter 11 bankruptcy, but did not specify a reason for filing bankruptcy in its petition.

Also, CL Cressler Inc., the owner of seven Medicine Shoppe Pharmacy stores located in Pennsylvania and New York, on Aug. 29, 2024, filed for Chapter 11 bankruptcy to reorganize its debts.

And now a huge drugstore chain that has filed for bankruptcy twice in the last two years is closing more locations.

Rite Aid is closing hundreds of store locations. Photo: Jens Kalaene/dpa (Photo by Jens Kalaene/picture alliance via Getty Images)

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Rite Aid sells its prescription records

Bankrupt drugstore chain Rite Aid, which filed for Chapter 11 protection a second time on May 5 as New Rite Aid LLC, has filed notices of additional store closing locations with the U.S. Bankruptcy Court for the District of New Jersey, seeking approval to close 210 stores and liquidate their assets.

Rite Aid filed its first notice with the court on May 9 to close 47 locations in nine states, including California (19), Pennsylvania (8), New York (5), Oregon (4), Connecticut (3), New Hampshire (3), New Jersey (2), Washington (2), and Massachusetts (1).

More bankruptcy:

The drugstore chain filed a second notice on May 9 to close 68 additional locations in seven states, including Pennsylvania (44), Oregon (8), Washington (6), Virginia (4), California (2), New Hampshire (2), and New York (2).

Rite Aid on May 16 filed a third notice to close 95 additional stores in six states, including Pennsylvania (81), California (4), Oregon (4), Maryland (3), Delaware (1) and Virginia (1).

The retailer will likely file several more additional store closing notices before its bankruptcy case closes, as it is expected to close all of its stores, estimated at about 1,240.

Judge Michael B. Kaplan signed an interim order on May 9 approving initial and additional location closings. Objections to any closings must be received by the court by May 30, with a final hearing to approve all closings on June 6.

Rite Aid also won approval on May 21 to sell prescription files from 625 of its stores in 15 states to CVS. The company also sold 64 Rite Aid stores in Idaho, Oregon and Washington to CVS.

The drugstore chain, which operated about 1,240 stores, also won approval to sell prescriptions at other locations to Walgreens, Albertsons, Kroger, Giant Eagle and others.