Major retailers with drugstore operations have been reducing the amount of their locations since the Covid-19 pandemic subsided in an effort to streamline operations, eliminate underperforming stores or leases that don't make sense and to cut severe retail left losses.
CVS (CVS) closed 300 stores in 2022, 300 in 2023, and said it planned to close another 300 in 2024 to reduce costs and cut losses. The company said it would consider several factors before closing a store, such as maintaining access to pharmacy services, local market dynamics, population shifts, a community’s store density, and ensuring there are other geographic access points to meet the needs of the community.
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Theft and organized retail crime led several retail chains to close down problem stores with serious losses from theft. Target (TGT) closed nine stores in four states in October 2023, which were located in the Seattle, New York, San Francisco/Oakland, and Portland metropolitan areas.
Target said it closed those stores since theft and organized retail crime had been threatening the safety of its team members and guests and contributing to unsustainable business performance.
Retail stores like CVS, Walmart (WMT) and Target have taken action by locking up popular items behind glass cases for the last few years to reduce the "shrink" rate from theft. While locking up items is an inconvenience to customers, Target claims its efforts have succeeded in reducing theft and have generated some thanks from customers who are able to find brands they need in stock.
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Walgreens in early 2022 and 2021 closed seven stores in San Francisco because of crime. Subsequently, the Walgreens Boots Alliance (WBA) subsidiary in a June 2023 said it would close up to 450 stores across the U.S. and U.K. to simplify its business.
Retail chains that file Chapter 11 bankruptcy often close stores and reject leases at locations that are underperforming or don't make economic sense to continue operating. If the retailer can't renegotiate a lease that has objectionable terms, they will often reject it in bankruptcy and shut down the store. In a Chapter 7 bankruptcy liquidation, all leases are usually rejected or sold and stores closed.
Rite Aid closes more store locations
Bankrupt drugstore chain Rite Aid, which filed for Chapter 11 bankruptcy on Oct. 15, 2023, submitted several more notices of additional closing stores in the U.S. Bankruptcy Court for the District of New Jersey, as it on June 13 filed a notice to close a store in New Haven, Mich.; and on June 12 filed a document to close a store in Wellington, Ohio.
More bankruptcy:
- Struggling restaurant chain operator files Chapter 15 bankruptcy
- Popular movie theaters owner files Chapter 7 bankruptcy
- Struggling furniture chain files Chapter 11 bankruptcy
The retailer also on June 11 filed a notice seeking to close a store in Los Angeles and another in New Philadelphia, Ohio. The four store closings brings Rite Aid's closed store count during its bankruptcy case to 355 of the original 2,100 stores that were open in the U.S. when the company. The drugstore chain initially filed an Oct. 17 motion to reject store leases and close 154 stores.
Rite Aid has continued closing even more underperforming stores across the nation and those with leases that are either expiring or do not make economic sense since it filed the initial store closing notice.
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