It’s been a rough few years for some well-known retailers and businesses. As the effects of the economic devastation caused by the global pandemic are still being felt, companies face a long list of other problems arising from inflation, new competition, rising costs of labor, high interest rates and more. As a result, numerous household-name companies filed for bankruptcy in 2023 and 2024.

A bankruptcy doesn’t necessarily mean a company is going out of business, of course. Chapter 11 bankruptcy is often used as a means to allow the company to work out its financial problems through restructuring. However, the spate of bankruptcies does indicate a potentially disturbing trend for retailers.

Rite Aid (RADCQ.PK)
Founded: 1962 in Scranton, Pennsylvania, under the name Thrift D Discount Center. Changed name to Rite Aid and went public in 1968.
At its peak (2008): Over 2,400 stores nationwide. Over 112,000 employees.
Date of bankruptcy: October 2023 (Chapter 11)
Major cause of bankruptcy: Lawsuits due to the opioid epidemic and sluggish retail market.
What went wrong:
Rite Aid grew rapidly after its founding. Ten years after its first store opened, it already operated 267 locations in ten states. By 1981, Rite Aid was the third-largest retail drugstore chain in the country, and it topped $1 billion in sales by 1983. Over the next 15 years, it continued its nationwide expansion by buying up smaller, local chains and putting its name on hundreds of stores in many states.
In 2022, Rite Aid was ranked No. 148 in the Fortune 500; however, it fell deeply into debt after being sued by creditors over its sale of opioid medications. Before it filed for bankruptcy, Rite Aid faced over 1,600 lawsuits alleging that the pharmacy chain ignored red flags and illegally filled prescriptions for addictive opioid medication.
After the bankruptcy, the case went before the US Department of Justice, and a deal was brokered recently with the creditors to allow the bankruptcy case to come to an end with a thorough restructuring of the company. The deal includes the closing of underperforming stores and the sale of some property.
At the time of its bankruptcy filing, Rite Aid faced $3.3 billion in debt as a result of the lawsuits and, in subsequent months, closed hundreds of stores. According to Reuters, the Justice Department deal cut $2 billion in debt and provided $47.5 million to junior creditors, including both individuals and local governments who sued the company. Rite Aid also announced the appointment of a new CEO, chief restructuring officer and new members of the company’s board of directors.
Even before the lawsuits started pouring in, Rite Aid was trying to change its business model to compete with retailers like Walmart and Amazon. Three years ago, the company unveiled its new concept stores. The “Stores of the Future” model aimed to be “spa-like destinations,” the company said in its announcement. Millennial and Generation X women are a key demographic Rite Aid is targeting with the revamp, it said at the time.
Although the lawsuits over its mishandling of the
opioid crisis may be behind it, Rite Aid will need to continue finding ways to compete in the new market to remain afloat.

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