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Rite Aid, the American drugstore chain headquartered in Camp Hill, Pennsylvania, announced on Tuesday, Dec. 21, that it will be closing down at least 63 store outlets in the United States.
Rite Aid said that as it assesses how many drugstores it needs in the country, it has come to a decision to eliminate more than five dozen locations. The company stressed that the shutting down of the stores is part of an ongoing review and it is still expecting to find more stores to close in the coming months.
According to CNBC, with Rite Aid’s move to close stores, it is aiming to lessen costs while boosting profitability. The closures already started last month and the target is to cease operations in 63 locations.
The closures will help improve the company’s earnings since there will be lower taxes and amortizations to pay. Profits may increase by as much as $25 million once the stores are pulled out.
The company announced the closures during its financial report for fiscal 2022 third-quarter results this week. Rite Aid earned more than the outcome of the expected sales but despite this, it still needs to improve its profitability.
“Today, we also announced the first phase of a store closure program to reduce costs, drive improved profitability and ensure that we have a healthy foundation to grow from, with the right stores in the right locations, for the communities we serve and for our business,” Rite Aid president and chief executive officer, Heyward Donigan, said in a press release. “We have identified an initial 63 stores for closure that is expected to provide an annual EBITDA benefit of approximately $25 million.”
Rite Aid added they are encouraged by the latest momentum so they are expecting to deliver a substantial increase in Q4’s Adjusted Earnings before interest, taxes, depreciation and amortization (EBITDA) results compared to 2020.
Finally, Rite Aid’s chief expressed his gratitude to all of its associates for everything they do for the company. “It is my greatest privilege to work alongside such a tremendous team, and I am forever grateful for their passion and commitment to our company, our customers, and each other,” he said.
