Rite Aid Corporation is closing 63 retail stores as it continues to invest in its omni-pharmacy strategy.
The pharmacy retailer said the “initial” 63 stores identified for closure, out of 2,488 at the end of Q3, should provide an annual EBITDA benefit of approximately $25 million.
Rite Aid is focused on growing its business, reducing costs and improving its leverage ratio, said CEO Heyward Donigan in the retailer’s earnings call. To that end, the company is rigorously assessing its store base and executing a store closure plan to reduce costs, drive improved profitability, and ensure it has a healthy foundation to grow its omni-pharmacy firm.
“The decision to close the stores is one we take very seriously as we evaluate the impact on our associates, our customers and our communities,” said Donigan. “First and foremost, we work hard to ensure the transfer of prescriptions is automatic and seamless for our customers and that all their prescription needs are met. Importantly, associates impacted by the store closures are being offered the opportunity to transfer to another store. These tough decisions allow us to ensure our company continues to thrive and provides us the opportunity to continue to invest in and drive our omni-pharmacy strategy.”
Rite Aid is going after the digital retail, pharmacy benefit managers (PBM), specialty and mail order pharmacy markets, Donigan noted, which he said will allow the company to expand beyond its17-state footprint to be a “national provider of pharmacy in an omnichannel way, not in a brick-and-mortar way.”
For the third quarter of fiscal 2022, the company reported net loss from continuing operations of $36.1 million, or $0.67 loss per share, Adjusted net income from continuing operations of $8.2 million and Adjusted EBITDA from continuing operations of $154.8 million.
Same store sales from continuing operations in Q3 increased 4.4% over the prior year period, consisting of a 5.9% increase in pharmacy sales and a 0.4% increase in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, increased 1%.
“We delivered a solid quarter as we grew Adjusted EBITDA by 12.7% versus last year,” said Donigan in a press release. “Despite challenges in the labor market, our pharmacists and store teams were able to meet the unprecedented volumes for COVID and flu immunizations, COVID testing and other clinical services, which clearly demonstrates our Lean work to free up capacity is paying off.”
“We are encouraged by our recent momentum and expect to deliver a significant increase in our fourth quarter Adjusted EBITDA results compared to last year,” he continued.
As a result, Rite Aid raised its guidance for Adjusted EBITDA for Fiscal 2022.