National drugstore chains have faced financial distress since the Covid-19 pandemic, leading to some of the largest chains designating 100s of stores for closure.
The most significant reason for all of the closings has been intense competition from consumers filling their prescriptions online through healthcare providers, Amazon, or specialty pharmacy providers like Mark Cuban’s Cost Plus Drugs.
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Consumers also fill their prescriptions at big-box retailers like Costco, Walmart, and Target, cutting into drugstore business. The big-boxes can also offer more choices and better prices on a variety of retail goods than the smaller drugstore chains.
Related: Bankrupt retail chain closing hundreds of store locations
Huge drugstore chain CVSÂ (CVS) Â 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 criteria for CVS closing stores considered several factors, 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 three years, 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.
Image source: Tom Werner/Getty Images
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 third notice of additional store closing locations with the U.S. Bankruptcy Court for the District of New Jersey, seeking approval to close 151 additional stores and liquidate their assets, adding to previously designated locations for closing, for a total of 361.
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Rite Aid already filed notices of store closing locations for 210 stores with the original notice and an additional closing notice on May 9, and a second additional closing notice on May 15.
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The first three groups of store closings listed locations in 12 states, including Pennsylvania (133), California (25), Oregon (17), Washington (8), New York (7), New Hampshire (5), Virginia (5), Connecticut (3), Maryland (3), New Jersey (2), Delaware (1), and Massachusetts (1).
The third notice of additional closing locations filed on May 23 lists Pennsylvania (44), California (34), New York (30), New Jersey (14), Virginia (8), Delaware (5), Washington (5), Idaho (4), Maryland (4), and New Hampshire (3).
Rite Aid expected to close all of its stores
New Rite Aid is expected to file several 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 also won approval to sell prescriptions at other locations to Walgreens, Albertsons, Kroger, Giant Eagle, and others.
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