US drugstore chain Rite Aid has announced plans to close 63 stores over the coming months, with the goal of reducing costs.
The company said the stores earmarked for closure were pinpointed as part of an ongoing review and it expects to identify further locations to close through the course of 2022.
Rite Aid posted mixed third quarter financial results, with the firm earning more than expected but seeing total sales lower than analyst projections. The retailer also lowered 2022 sales targets.
The closures were confirmed during the third-quarter earnings call by Rite Aid CEO Heyward Donigan.
“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,” Donigan said, adding that affected employees will be given opportunity to transfer to another store. No details about which of the company’s 2,400+ stores had been selected for closure were given.
The markets responded positively to the decision, and Rite Aid shares were up by 21.4% at close on Tuesday. The stock is finishing the year strongly and has almost regained previous losses, with shares now down by just 4% year to date.
Rite Aid’s announcement follows on the heels of a similar decision by rival drugstore chain CVS, who announced last month that they were planning to close 900 stores over the next three years.
Whilst the retail sector in general has made a huge shift towards online shopping due to the Covid-19 pandemic, the purchase of medication has seen an even larger surge in digital purchases, with the nature of the business meaning customers are generally unwell and therefore additionally wary of contracting the virus.
CVS confirmed that its planned store closures were part of a strategy to focus more heavily on online sales, and it is believed that the same driving force is behind the Rite Aid decision.