Walgreens Close To Buying Rite Aid

cathandler
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Re: Walgreens Close To Buying Rite Aid

Post by cathandler »

CalItalian wrote:Walgreens, Rite Aid To Certify Compliance, Forcing FTC's Hand On Merger Within 60 Days
https://www.forbes.com/sites/brucejapse ... 676ed83f90
Well, we should know shortly if the Feds block it or not. I'm leaning towards they're going to block it.
I think so, too. Having been burned twice (Haggen, Dollar Express) the FTC will, I think, finally come to their senses in terms of making a meaningful assessment of the ability of the acquiring party of the spinoffs to actually operate the stores and find Fred's wanting. As for Walgreens' own operational issues, there is much overstoring in the pharmacy space as there is in just about every other retail category, so I think they're pressing the issue with the FTC to eliminate a competitor (and shed a ton of underperforming stores on a willing dupe like Fred's.) Even CVS is shedding locations.
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Re: Walgreens Close To Buying Rite Aid

Post by Alpha8472 »

In the past few years pharmacies have been struggling with less and less money coming in from insurance companies. Pharmacies are losing money on certain drugs and certain insurance plans. Many supermarkets are closing down their pharmacies as they are losing money especially with some awful Medicare and Medicaid plans.

Even Wal-Mart has been cutting pharmacy hours to save money. No longer can you make a profit for sure in the pharmacy.

This is a serious crisis across the country. In order to remain profitable CVS and Walgreens have been turning away some patients with terrible insurance plans. Wal-Mart accepts practically every insurance and is struggling. Wal-Mart and other weaker chains such as Fred's need to take a lesson from Walgreens and stop taking these money losing plans or else their pharmacies will end up closing down completely.

Walgreens over expanded and in some cases having a store on every major street corner was a mistake. Trying to dump those excess stores onto Fred's will affect Fred's in the most negative way.
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Re: Walgreens Close To Buying Rite Aid

Post by CalItalian »

This deal looks like it is headed to being blocked.
http://nypost.com/2017/05/16/ftc-steps- ... id-merger/
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Re: Walgreens Close To Buying Rite Aid

Post by storewanderer »

Sometime in the past two weeks, Rite Aid started a remodel on its Gardnerville, NV Store. This one was last remodeled about 10 years ago so it had the interior that was in use immediately before the "Wellness" interior already. This is the last Rite Aid in Nevada and I think its pharmacy does pretty well, but front end does terrible.

There is a Walgreens directly across the street (which has less traffic than Rite Aid has in pharmacy, but perhaps a little more for front end). This particular Walgreens (along with all but 3 of the locations of Walgreens in this part of Nevada) is one of the company's poorly performing stores as evidenced by the removal of some aisles, major number of items being discontinued, and removal of all back wall-facing endcaps in the past few months.
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Re: Walgreens Close To Buying Rite Aid

Post by Alpha8472 »

Walgreens is cutting assortment because they think that it will increase their profits. It will irritate and annoy customers. They are going to lose even more customers.

Their stores are already so high priced that many customers are shopping elsewhere. Why pay more when you can go to Walmart or Target?

Rite Aid is continuing remodels because this deal is looking more unlikely by the day. Even if the deal goes through, Fred's will still need to take care of their stores if they want to try to stay alive.
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Re: Walgreens Close To Buying Rite Aid

Post by storewanderer »

Walgreens is very high priced. I get few good deals from them. I get a lot of great deals at both CVS and Rite Aid. Really, really great deals when combining coupons with the Plenti or Extra Bucks offers (combine the $ off certain purchase amounts like $10 off $50 or $6 off $30 with it and it sweetens the deal even more).
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Re: Walgreens Close To Buying Rite Aid

Post by Super S »

Rite Aid let some stores go too long before remodeling. Some were looking bad. The remodels are making a world of difference in their appearance, especially the former PayLess stores. Walgreens, meanwhile, seems to be slipping. Among other things, I have noticed dirt buildup on the floors and visible wear patterns where people have been walking at three separate locations in addition to things like worn countertops. Walgreens has mostly newer buildings but their appearance has not reflected that lately. About the only thing they are useful for is when I need to get in and out quickly.
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Re: Walgreens Close To Buying Rite Aid

Post by storewanderer »

Walgreens lately is in a major expense cut mode. They have pegged thousands of poorly performing stores as "opportunity stores" and the result of this is significant cuts to merchandise mix, removal of all back-wall facing endcaps, elimination of floor cleaning and parking lot cleaning service, and major staffing cuts in the stores (including some layoffs). They have been pushing various programs on the stores that do not help sales and profit at all but they are pushing the stores to focus on those initiatives. Actually what they are trying to do is go toward the CVS model which has lower stock, lower labor, lower costs, and can better survive on lower volume. This is a pretty unpleasant when applied to low volume stores as it leads to dirty, poorly stocked, virtually unstaffed (not uncommon to have only one employee on duty on front end) stores that are very unpleasant places to shop.

The higher volume stores haven't really been impacted by all of this that I described above, it is just the low volume ones. I expect in a lot of markets, few stores are impacted. I was in a few Walgreens in rural Kansas and found all of those stores impacted (and customer counts were near zero). In my market, 8 of the 11 stores are considered opportunity stores.

This is not the same Walgreens that it was 2 years ago when they announced the Rite Aid merger. I do not think they are even in a position right now to do this merger.
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Re: Walgreens Close To Buying Rite Aid

Post by mbz321 »

storewanderer wrote:Walgreens lately is in a major expense cut mode. They have pegged thousands of poorly performing stores as "opportunity stores" and the result of this is significant cuts to merchandise mix, removal of all back-wall facing endcaps, elimination of floor cleaning and parking lot cleaning service, and major staffing cuts in the stores (including some layoffs). They have been pushing various programs on the stores that do not help sales and profit at all but they are pushing the stores to focus on those initiatives. Actually what they are trying to do is go toward the CVS model which has lower stock, lower labor, lower costs, and can better survive on lower volume.

It sounds like they still have way too many locations than they need. Looking at the industry as a whole, I think the corner drugstore business model is dead..the chains are all pretty indistinguishable from each other and pretty much every item can be purchased elsewhere for way less (an example I happened to look up to prove to someone the other day...a bottle of Equate brand Aspirin from Walmart...$3.59. CVS Brand, same size is 'on sale' for $629, with a ridiculous regular price of $8.99). A lot of Insurance companies are making their customers use mail order pharmacies and such as well, so they can't even really make it just on Prescriptions alone. Sure, a lot of locations will still do fine due to sheer convenience of nothing else nearby or perhaps open 24 hours, but having a store every 3 miles is not sustainable.
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Re: Walgreens Close To Buying Rite Aid

Post by pseudo3d »

The drugstore business has gotten far too diluted with the convenience store business, which has proved to be a hardier model over the years, especially as square footage for convenience stores has tended to increase. The selection is generally better than convenience stores (of course, they're larger) and drug stores have saved me twice when it came to buying a Mother's Day card on the day of, but I can find a better selection and far cheaper prices of everything a drug store has at a supermarket, and said supermarkets are about the same area of pharmacies anyway, making it irrelevant to go there.
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