Rite Aid Files For Bankruptcy AmidSlumping Sales and Opioid Suit

Rite Aid, the drugstore chain, filed for Chapter 11 bankruptcy protection in New Jersey and named Jeffrey Stein as the new CEO to oversee the company's restructuring efforts.

Rite Aid has struggled with declining sales, growing debt, and legal claims connecting it to the opioid crisis. Intense competition from rivals, emphasizing healthcare services, compounds its challenges.

The company has secured an agreement with creditors for a restructuring plan, involving a review of its retail presence and the closure of poorly performing stores.

Lenders have consented to offer $3.45 billion in fresh funding to ensure ample liquidity as Rite Aid commences its restructuring strategy.

In the quarter ending June 3, revenue dropped to $5.6 billion from $6.01 billion a year ago. Net losses increased to $306.7 million, or $5.56 per share, compared to $110.2 million, or $2.03 per share, in the corresponding period last year.

Due to a challenging quarter, Rite Aid revised its fiscal 2024 forecast, cautioning investors about an anticipated full-year loss of $650 million to $680 million, concluding in late February.

Drugstores like Rite Aid grapple with an existential challenge as consumers increasingly opt for Amazon, Target, Walmart, and similar retailers, offering lower prices and doorstep convenience for everyday essentials.