Nationwide retail chains with pharmacy operations sometimes take shoppers by surprise by closing store locations for various reasons.
Retailer justification for closing stores in the past year has ranged from financial distress, expiring leases that no longer makes sense, theft and organized crime.
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Target (TGT) in October 2023 closed nine stores in four states because of theft and organized retail crime, after Walgreens in early 2022 and 2021 closed seven stores in San Francisco because of crime. The Walgreens Boots Alliance (WBA) subsidiary in a June 2023 earnings call said it would close up to 450 stores across the U.S. and U.K. to simplify its business.
CVS (CVS) in 2021 said it could close up to 300 stores each year in 2022, 2023, and 2024 to reduce costs and cut losses. The company said it would consider several factors before closing a store, 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.
Walmart (WMT) in 2023 closed 24 stores in 14 states and Washington, blaming theft and underperformance as the main reasons for the closures. It closed a few more stores in 2024, including two underperforming locations in the San Diego area. It also closed one in Columbus, Ohio, for failing to meet financial expectations.
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Bankruptcy filings are another reason pharmacy retailers are shutting down locations.
Bankrupt drugstore chain Rite Aid has been closing store locations across the nation since it filed for Chapter 11 bankruptcy to reorganize its operations on Oct. 15, 2023. The company has been closing underperforming stores and those with leases that are either expiring or do not make economic sense.
Rite Aid closing more store locations
The Philadelphia-based retailer on May 7 filed a notice of additional closing stores in the U.S. Bankruptcy Court for the District of New Jersey, which listed four locations that it will shut down in New York City; Philadelphia; Virginia Beach, Va.; and Sewell, N.J.
Rite Aid last filed notices for additional closures on April 26 to close seven additional locations in the Midwest and East and on April 23 to close 16 stores across the nation.
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The latest Rite Aid store closures bring the amount of shuttered locations to 349 of the original 2,100 stores that were open in the U.S. when the company filed for Chapter 11 bankruptcy. The drugstore chain initially filed an Oct. 17 motion to reject store leases and close 154 stores.
The retailer faced strong competition from its rivals including CVS (CVS), Walgreens Boots Alliance (WBA), Walmart (WMT) , Costco (COST) , Amazon (AMZN) and investor Mark Cuban's CostPlus Drug, which contributed to the debtor's financial woes.
The company was also a defendant in a civil lawsuit filed against it by the Department of Justice in March 2023, which 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 bankruptcy case, however, also provides the company the opportunity to negotiate a settlement at a potentially lower amount than outside of bankruptcy.
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