Rite Aid Files for Bankruptcy Again, Announces Store Closures

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A Rite Aid store preparing for closures and asset sales.

News Summary

Rite Aid has filed for Chapter 11 bankruptcy for the second time in two years, significantly impacting its operations across the U.S. Almost all of its 1,240 stores will be listed for sale, with closures affecting 178 locations in New York alone. The company has begun notifying employees of layoffs and will cease gift card transactions starting June 5, 2025. CEO Matthew Schroeder cited financial challenges from competitors like Walmart and CVS as primary reasons for the bankruptcy and layoffs. Rite Aid’s restructuring aims to maximize value for creditors.

Rite Aid files for bankruptcy – Rite Aid has filed for Chapter 11 bankruptcy for the second time in two years, significantly impacting its operations across the United States. The retail pharmacy chain has announced plans to close stores and auction off leases and buildings, aiming to streamline its business model amid ongoing financial troubles.

Pending court approval, nearly all of Rite Aid’s 1,240 stores across 15 states will be listed for sale. A&G Real Estate Partners has been appointed to manage the sale process, which will feature rolling bid deadlines and auctions set to commence in May 2025. In the initial phase of the bankruptcy process, 47 locations across nine states have been identified for closure.

The states affected by the planned closures include California, Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, and Washington. Specifically, in New York, Rite Aid will close all 178 stores, which includes 11 locations in the Capital Region. Closure notices have been issued, stating that stores will cease honoring gift cards, returns, and exchanges starting June 5, 2025. Employees at the affected stores have begun receiving layoff notifications, with initial layoffs set to begin on June 4, 2025.

CEO Matthew Schroeder cited unsuccessful efforts to secure additional capital to sustain operations as a primary reason for the layoffs. Rite Aid has been grappling with mounting financial challenges, including losses attributed to intense competition from Walmart, CVS, and Walgreens.

This is not the first time Rite Aid has entered bankruptcy. The company previously filed for bankruptcy protection in 2023, which led to the closure of numerous stores as it attempted to stabilize its finances and restructure its operations.

As a part of the restructuring process, Rite Aid has also announced that they will no longer issue points for rewards members, and any accumulated points will expire as per the usual terms. Additionally, the company plans to sell its prescription files to competitors, although there is no guarantee that these files will be transferred to nearby pharmacies.

The planned store closures and asset sales are part of a strategy to maximize value for creditors amidst a challenging market affected by the opioid crisis. Rite Aid has seen significant declines in sales, which have hampered negotiations with lenders. Currently, liquidation sales have started at various locations, and many stores are expected to close over the next few months.

Founded in 1962 in Scranton, Pennsylvania, Rite Aid had experienced considerable growth, operating over 5,000 locations at its peak. However, in recent years, the company has struggled in an intensely competitive retail environment, which has severely impacted its viability as a pharmacy chain.

Customers who regularly use Rite Aid for their prescriptions are advised to transfer their medications to alternative pharmacies promptly to avoid interruption in service as the restructuring process unfolds.