The drugstore retail sector has closed hundreds of stores over the last four years for a variety of reasons, including losses from theft of merchandise, underperforming stores that no longer make economic sense to operate, and stores with lease rates too high for the market rate.
The nation's biggest drugstore chains have been busy since 2021 seeking to cut costs and losses by shutting down stores.
💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter💰💵
Walgreens, which operates about 8,600 stores with 6,000 profitable locations, evaluated 2,000 stores for potential closure and identified 1,200 locations to shutter, with 500 set to close in fiscal year 2025.
Related: Major logistics and trucking company files Chapter 11 bankruptcy
The retail chain, which in March agreed to be sold to private equity firm Sycamore Partners, said it will 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.
Hundreds of stores closed
Huge drugstore chain 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.
The company took community needs into consideration, 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.
A severely distressed and iconic drugstore is in the process of winding down its store count.
Rite Aid closing more stores
Bankrupt drugstore chain Rite Aid, which filed for Chapter 11 protection a second time on May 5 as New Rite Aid LLC, has filed a fourth notice of additional store closing locations with the U.S. Bankruptcy Court for the District of New Jersey, seeking approval to close 111 additional stores and liquidate their assets, adding to previously designated locations for closing, for a total of 472.
Related: Bankrupt drugstore chain closing over 150 stores; here’s where
Rite Aid already filed notices of store closing locations for 361 stores with the original notice and an additional closing notice on May 9, a second additional closing notice on May 15, and a third additional closing notice on May 23.
More bankruptcy:
- Iconic auto repair chain franchise files Chapter 11 bankruptcy
- Popular beer brand closes down and files Chapter 7 bankruptcy
- Popular vodka and gin brand files for Chapter 11 bankruptcy
The first four groups of store closings listed locations in 13 states, including Pennsylvania (177), California (59), New York (37), Oregon (17), New Jersey (16), Virginia (13), Washington (13), New Hampshire (8), Maryland (7), Delaware (6), Idaho (4) Connecticut (3), and Massachusetts (1).
Rite Aid's fourth additional closing notice filed on May 30 includes store closings in California (39), New York (39), Washington (11), New Hampshire (6), Maryland (3), Oregon (3), Virginia (3), Connecticut (2), Vermont (2), Delaware (1), New Jersey (1), and Pennsylvania (1).
New Rite Aid is expected to file several additional store closing notices before its bankruptcy case closes, as it plans 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 the interim location closing order and any of the proposed store closings must be filed with the court and received by the debtor and their counsel no later than June 9, according to court papers.
Related: Another major internet company files for Chapter 11 bankruptcy
