Camp Hill, Pennsylvania-based Rite Aid has announced a major restructuring that “will reduce managerial layers and consolidate roles across the organization, resulting in the elimination of approximately 400 full-time positions, or more than 20% of the corporate positions located at the Company's headquarters and across the field organization.” According to the company, “As a result of the restructuring, Rite Aid expects to achieve annual cost savings of approximately $55 million, of which approximately $42 million will be realized within fiscal year 2020. These cost savings will serve to offset an expected reduction in income associated with its diminishing obligations under the Transition Services Agreement with Walgreen Co., which related to the prior sale of stores.” Of course this references the effects of a number of failed merger initiatives which saw a large number of stores to the Walgreens Boots Alliance.
According to Rite Aid Board Member Bruce Bodaken, “It is imperative we take action to reduce the cost of current operations and become a more efficient and profitable company. “The board believes that now is the right time to undertake a leadership transition.” A company spokesperson added, claimed that the changes were for the purposes of “more closely aligning the structure and leadership of the company with the scale of its operations and pointed out that the executive departures “are not at all a result of any wrongdoing.”
There is little or no doubt that this once prosperous large company is in serious trouble, both operationally and in Wall Street. Once the company was “ranked No. 94 in the 2018 Fortune 500 list of the largest United States corporations by total revenue. The stock is now selling at a fractional value under $1 that demands a reverse split, stock exchange de-listing, or a white-knight acquisition. A very uncertain future.
Employees should not take their continued employment for granted given the present circumstances and the need to drastically reduce operational costs.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?