(RoyalPatriot.com )- Rite Aid announced on Tuesday that it will shut at least 63 stores around the country as it works to re-assess how many physical locations it really needs.
The drugstore chain said they identified the necessity of these closures as part of a review it conducted of its entire company. The company also said that, over the next few months, it will probably find even more stores that it will shut down.
According to company officials, the goal of shutting down the stores is to boost profitability and create a “healthy foundation” going forward by reducing costs. The company expects that the 63 store closures, which started in November, will boost their EBITDA — or earnings before interest, taxes, depreciation and amortization — by approximately $25 million.
This week, Rite Aid reported financial results that were mixed for the third quarter of its fiscal year. The company earned more than investors had expected when you take it on an adjusted basis, but sales for the three months that closed November 27 were lower than many analysts had expected.
Rite Aid also ended up cutting its sales outlook for the remainder of its fiscal year.
Despite that, CNBC reported that shares of the company closed up 21.4% on Tuesday. Year to date, the company’s shares are down roughly 4%, and it has a market capitalization of roughly $839 million.
Rite Aid didn’t publish a full list of the stores that it plans to shut down, or when the shutdowns will actually occur. In total, the company has more than 2,400 retail locations for its store and pharmacies across the United States.
Pharmacies and stores shutting down retail stores is not a new trend. Just last month, CVS Health announced that, over the next three years, it would close approximately 900 stores. The reason the company said it was doing so was to adjust to the fact that consumers are purchasing more and more products online today.
The company will begin to shut down some of those stores on the list in the spring of 2022.
CVS Health, along with its major competitor Walgreens, have been working to focus much more on growing their digital efforts. On the retail front, they are working to change their stores into health destinations, where people can go in to get flu shots and diagnostic tests, while also purchasing other products they’re used to being offered at the stores.
This plan could work, as they become one-stop-shops for people who still prefer to get some products in person. It could also be seen as a smart move to try to attract people to make additional purchases when they are filling and picking up their prescriptions.
Many of the household items that these drugstores sold in their retail locations are now readily available online at mammoths such as Amazon, or in other retail locations that offer much more, such as Target and Walmart.