Rite Aid To Lay Off 400 Jobs
As the company is struggling with the numerous changes in the pharmaceutical and retail industries, Rite Aid, one of America's biggest and longest-running drugstore chains, has decided to shake up its leadership ranks and lay off around 400 of its current workers.
According to a company statement released last Tuesday, the drugstore has apparently decided to replace three of its top executives. This includes current CEO John Standley, who has led the company for almost a decade now, starting back in 2010. The company's chief financial and operating officers are also getting replaced. However. Standley will remain as the company's CEO at least until the company finds a suitable successor.
Furthermore, the company also confirmed that it will be eliminating around 400 full-time corporate jobs. This is roughly equivalent to around 20 percent of the manpower at the company's headquarters. Viewed as a restructuring plan for the struggling company, the company expects to save around 55$ million a year from this business strategy.
Referring to Rite Aid's recent company decisions, Mickey Chadha, who's an analyst at Moody's, said, "It is a positive in light of the intense competitive pressures the company faces."
A rise in stocks
After Wall Street approved of the changes, Rite Aid's stock rose to as much as 4 percent during Wednesday trading, which is equivalent to around 70 cents a share. Rite Aid's stock fell below $1 in December.
Through the more recent years, the drugstore chain has struggled to keep with bigger and newer rivals such as CVS and Walgreens. In fact, back in 2015, it has lost almost $5 billion in sales, making its stock price suffer and pushing it to close a lot of locations.
More recently, competitors of the company consolidated, mainly to ease pressure from Amazon while also increasing their profits. Furthermore, CVS also agreed to buy Aetna, a health insurer, for an amount of $69 billion two years ago, while both Cigna and Express Scripts closed their $67 billion deal last year.
The plan to restructure and lay off most of its employees came just after Albertson attempted to purchase Rite Aid and failing to do so. Recently, Strandley made an agreement with Albertsons. This new agreement would have given the company around 4,900 new locations in the United States. However, both companies called off the deal after shareholders disagreed, stating that the agreement undervalued Rite Aid as a company.