Rite Aid Corp. said Monday (May 5) that it has filed for Chapter 11 bankruptcy protection again, less than a year after emerging from a previous restructuring effort.
This bankruptcy filing would be the company’s second in under three years. Rite Aid initially filed for Chapter 11 in October 2023. That process aimed to reduce approximately $2 billion in debt and involved closing around 850 store locations, ultimately resulting in lenders taking control of the business.
Rite Aid emerged from that bankruptcy in September, stating it was in a stronger position with “significantly less debt and additional financial resources.” According to then-CMO Jeanniey Walden in an interview with PYMNTS the following month, the financial difficulties experienced during the bankruptcy served as powerful “silo busters.” They compelled departments to overcome their divisions and collaborate in pursuit of the company’s objectives.
However, the restructuring was apparently insufficient, as the pharmacy chain still carried over $2 billion in debt and has continued to face challenges from inflation and lower consumer demand.
In its statement Monday, Rite Aid said “it is pursuing a strategic and value-maximizing sale process for substantially all of its assets.”
Rite Aid also plans to reduce its workforce at its corporate headquarters in Pennsylvania, according to Chief Executive Officer Matthew Schroeder in a letter to employees seen by Bloomberg News. The job cuts are being made due to a “dramatic downturn in the economy,” as well as increased expenses related to tariffs, suppliers and landlords. Schroeder indicated that lenders would not provide funds for payroll and other employee costs if the entire workforce were kept on.
Schroeder also reportedly informed employees in a brief address that every Rite Aid store would either cease operations or be sold. The company is reportedly in discussions with various regional and national interested parties who may acquire portions of the business.
Adding to the financial difficulties, Schroeder mentioned that a major vendor recently informed Rite Aid of stricter and shorter payment terms, which could potentially trigger an acceleration of a company loan, according to Bloomberg.
Across the retail sector, lenders have been feeling concerned about the future impact of tariffs. This anxiety is affecting not only retailers but also their tech partners. A report earlier this month revealed that venture capital for retail FinTechs plummeted 38% in the first quarter.
