Rite Aid is shaking up its leadership ranks and slashing 400 jobs as the company struggles to adapt to changes in the retail and pharmacy industries.
The drug store chain said Tuesday that it will replace three top executives, including CEO John Standley, who has led Rite Aid since 2010, as well as the company’s chief financial and operating officers. Standley will remain CEO until Rite Aid appoints a successor.
Rite Aid also said it would eliminate around 400 full-time corporate jobs, or 20% of the positions at the company’s headquarters. Rite Aide expects to save around $55 million a year from the restructuring plan.
Wall Street approved of the changes. Rite Aid’s stock rose 4% during Wednesday trading — to around 70 cents a share. Rite Aid’s stock fell below $1 in December.
“It is a positive in light of the intense competitive pressures the company faces,” Mickey Chadha, analyst at Moody’s, said of Rite Aid’s moves.
Rite Aid has struggled to keep up with bigger rivals such as CVS and Walgreens. It has lost nearly $5 billion in sales since 2015, closed stores and its stock price has suffered.
More recently, Rite Aid’s competitors consolidated in order to lower costs, increase profits and stave off pressure from Amazon. CVS agreed to buy health insurer Aetna in 2017 for $69 billion and gained the government’s approval last year. Express Scripts and Cigna also closed their $67 billion deal last year.
The restructuring and layoffs come months after Albertsons’ attempt to buy Rite Aid’s collapsed. Standley struck an agreement with Albertsons last February that would have created a new company with about $83 billion in annual sales and 4,900 locations across the United States. But the two companies called off the deal after pushback from shareholders who complained it undervalued Rite Aid.
“We have heard the views expressed by our stockholders,” Standley said in August.
Rite Aid was an acquisition target even before Albertsons.
Walgreens wanted to buy all of Rite Aid in 2015, but federal regulators nixed that agreement on antitrust grounds. In 2017, the two companies announced a scaled back version for nearly 2,000 of Rite Aid’s stores. That left Rite Aid with around 2,600 stores.