Several Pittsburgh-area Rite Aid stores to close after company files for bankruptcy
PITTSBURGH (KDKA) — Rite Aid, a Philadelphia-based pharmacy company, has filed for Chapter 11 reorganization.
Several local Rite Aid stores, including the one in Crafton and the one at the corner of Route 51 and Route 88 have already closed and more stores around the area are set to close in the coming days. KDKA-TV money editor Jon Delano takes a closer look at what that means for its employees and customers.
With more than 2,100 retail stores across 17 states and thousands of employees, Rite Aid's filing for Chapter 11 is a last-ditch attempt to reorganize to keep many of its stores open. Wendell Young, president of the United Food and Commercial Workers that represents many Rite Aid employees, says he just heard from Rite Aid officials.
"They're going to continue to make sure everyone is going to get paid at this time," Young said. "They're going to honor the contracts. They have no intention of going before the court to have them dismissed. But I'll tell you, we hear that from every company that files for bankruptcy, so time will tell where this goes."
Chapter 11 is a way for companies to buy time, reorganize, secure financing, pay off creditors at a discount, rewrite labor agreements and often downsize to remain open. Young said a number of stores have already closed.
"It's not just here in Pennsylvania where many stores have been closed, union and non-union," he said. "It's all across the country, and it's been going on for months now."
After companies like Rite Aid, CVS and Walgreens chased out or gobbled up the small independent pharmacies, now they too are feeling stress from new competitors.
"This landscape's evolved a lot," Young said. "You've got the big box stores. You've got Amazon and others really aggressively pursuing this business, both at the retail delivery but also through online and by the mail. And you have health systems getting into as well where people can now often get drugs out the door from their doctors' offices and hospitals."
Online, by mail, doctors' offices even grocery stores — everyone is selling drugs these days. And while Young hopes Rite Aid, through Chapter 11 reorganization, can survive in some format he worries the Rite Aid chain could go belly up and liquidate.
"No one can say for sure what's going to happen here, but I think the challenges that every one of these retail pharmacies have are hitting Rite Aid harder than the others because they weren't in as strong a financial position, and that alone would be a leaner towards liquidation," he said.
In its statement, Rite Aid says it's looking to close additional underperforming stores, but no word on where those are located. And Rite Aid promises to transfer prescriptions to nearby pharmacies that can best help its customers.