National retail chain closes more locations in bankruptcy filing

The Philadelphia-based retail chain has filed notices in bankruptcy court to close more stores.

Apr 30, 2024 - 10:30

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National retail chain closes more locations in bankruptcy filing

Major retail chains with pharmacy operations have closed some of their locations over the past four years since the Covid-19 pandemic began, mostly for reasons other than financial distress or bankruptcy.

Retailers, such as Walmart, Walgreens and Target, blamed theft and organized crime for many of their closings from 2021 to 2023. Walgreens in 2021 and early 2022 closed seven stores in San Francisco because of crime.

Target in October 2023 shut down nine stores in four states for theft and organized crime. Walmart in 2023 closed 24 stores in 14 states and Washington, blaming theft and underperformance as the main reasons for the closures.

But then there are retailers facing financial hardship who need to file bankruptcy.

Bankrupt drugstore chain Rite Aid has been closing store locations since it filed for Chapter 11 to reorganize its business on Oct. 15, 2023. The company has been shutting down underperforming stores and those with leases that don't make economic sense.

A woman browses through what items remain on near empty shelves at a Rite Aid store in Alhambra, Calif., on Oct. 18, 2023, which closed shortly afterward. (Photo by Frederic J. Brown/AFP via Getty Images)
FREDERIC J. BROWN/Getty Images

Rite Aid closing 23 more store locations

The bankrupt drugstore chain on April 26 filed a notice in the U.S. Bankruptcy Court for the District of New Jersey seeking to close seven additional stores located in the Midwest and East. The notice identified stores located in Bridgeport and Northford, Conn.; Port Monmouth and Williamstown, N.J.; Norfolk and Virginia Beach, Va.; and Dayton, Ohio.

The notice to close the seven stores was filed three days after the debtor filed another notice on April 23 seeking to close 16 additional stores across the nation. The stores are located in Philadelphia, Wayne, Allentown, and Pottsville, Pa.; Los Angeles, Novato and Orange, Calif.; Hackensack, Barnegat and Sicklerville, N.J.; Long Beach and Saratoga Springs, N.Y.; Dayton and Canton, Ohio; Bloomfield Hills, Mich., and Richmond, Va.

The additional store closures bring the amount of shuttered locations to 345 of the original 2,100 stores that were open in the U.S. when the company filed for Chapter 11 bankruptcy.

Rite Aid, which listed $3.3 billion in debt in its petition, filed bankruptcy facing financial distress magnified by strong competition coming from its rivals including CVS (CVS) , Walgreens Boots Alliance (WBA) , Walmart (WMT) , Costco (COST) , Amazon (AMZN) and investor Mark Cuban's CostPlus Drug.

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The company was also a defendant in a civil lawsuit filed against it by the Department of Justice in March 2023. The agency alleged that the chain's pharmacists inappropriately filled opioid prescriptions, contributing to the opioid epidemic.

The bankruptcy filing provides an automatic stay of any further legal action against the debtor in the lawsuit while the Chapter 11 case proceeds. The company will seek to negotiate a less expensive settlement, which could have amounted to more than $1 billion without the bankruptcy filing.

The drugstore chain has filed several notices for additional store closures since its Oct. 17 motion to reject store leases and close 154 stores. In November and December 2023, it filed notices to reject 55 more stores and in late December and early January, it sought another 45 closures.

The Philadelphia-based drugstore chain filed notices on April 2 to close 30 stores, April 3 to close six locations and April 9 to close 17 stores. The company had also filed a notice to close stores located in Michigan and Ohio on Feb. 27.

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