Rite Aid closing at least 63 stores

[storewanderer]

There are no vaccine appointments available after November 15 at the South Lake Tahoe Rite Aid... maybe this is just some kind of coincidence. Ironic after they moved a new manager into the store who was trying to fix the store up and seemed to be making some inroads the past few weeks. Too little too late and I suspect the amount of outdates that were found didn't help.

Maybe they can take the 3 self checkouts that this store had and deploy 1 at Kings Beach, 1 at Truckee, and 1 at Gardnerville. The units are basically brand new since South Lake Tahoe rarely bothered to open them. Would be nice to see the ice cream counter that South Lake Tahoe rarely opened moved down to Gardnerville too but I suspect there is zero chance of that. No space at Kings Beach for that. I'm glad to see the well operated Kings Beach and superior operated Gardnerville Stores hanging on.

[ClownLoach]

I wouldn't call Los Olivos in Irvine busy. High rent, absolutely and was a very pretty store. But it never did any volume and admittedly when I lived across the street I think I shopped there less than 5 times because it made more sense to drive across the freeway for Target or Walmart. That Whole Foods next door to Rite Aid is probably the worst performer outside of Huntington Beach-Brookhurst and I wouldn't be surprised if Amazon closes it at the first lease term expiration. I know you think the Albertsons just north will close, my bet is that Whole Foods does even worse and would be an ideal 99 Ranch, or even better the first SoCal Patel Brothers.

Last week, I spoke with one of the managers of the Irvine location. He claimed that sales were above average but the rent was among the highest of any Rite Aid. That would make sense. It had longer hours than most area stores, for example. A huge shame -- probably the nicest drug store in the area. The build out costs are obviously huge and unmatched.

The Rite Aid a few miles up the road at El Toro has been a virtual ghost town for years. It closed the photo department awhile ago, carries significantly less alcohol than it did and has large empty spaces. But Rite Aid made some improvements to the store recently, including add self-checkouts. But Rite Aid built that store from the ground up and probably sold & leased it back under favorable terms.

Irvine Company must have plans for their spot and tenants lined up otherwise they would have probably negotiated to keep them since it's a highly visible location.

[veteran+]

That whole center is gross!

I think it is an eyesore for that part of Palm Canyon.

[Bagels]

Irvine Company must have plans for their spot and tenants lined up otherwise they would have probably negotiated to keep them since it's a highly visible location.

Allegedly the rent is nearly $2M per year. Most area Rite Aids are somewhere between $300K-$500K. The store probably isn't producing enough volume to negotiate a decrease in rent. I've heard that 80%+ of its business is pharmacy and it's never had an extensive selection of alcohol.

Several other Rite Aids on the closing list do decent volume but suffer from high rents as well. The Dana Point location has long been a favorite with beach goers.

[storewanderer]

No sign of pending closure in the South Lake Tahoe Store. The employees know nothing. They even have a now hiring sign that has just appeared hiring with many openings.

Well the store has hundreds or maybe thousands of out of stocks. Vitamins and cosmetics are the worst for in stock. They have a ton of Halloween and Christmas items. Even had 2 of the self checkouts up and running. Going to be interesting to see what happens come November 15.

[storewanderer]

Additional closures per Pacer filing done 10/24, Docket Number 236

Interesting thing about these is they still have vaccine appointments ongoing you can schedule in December etc. no cut off for the vaccine scheduling... (not sure the 6934 store since that is a Bartell, not sure where to search for their vaccine appointments).

No. Store No. Property Address City State Zip Code
1 5232 303 91ST AVENUE, NE STE D401 LAKE STEVENS WA 98258
2 2604 6101 NORTH BROAD STREET PHILADELPHIA PA 19141
3 5525 4525 E. PACIFIC COAST HIGHWAY LONG BEACH CA 90804
4 6934 12946 SE KENT KANGLEY RD KENT WA 98030
5 11008 353 EAST 6TH STREET ERIE PA 16507

[ClownLoach]

Irvine Company must have plans for their spot and tenants lined up otherwise they would have probably negotiated to keep them since it's a highly visible location.

Allegedly the rent is nearly $2M per year. Most area Rite Aids are somewhere between $300K-$500K. The store probably isn't producing enough volume to negotiate a decrease in rent. I've heard that 80%+ of its business is pharmacy and it's never had an extensive selection of alcohol.

Several other Rite Aids on the closing list do decent volume but suffer from high rents as well. The Dana Point location has long been a favorite with beach goers.

Without getting into so much detail that I potentially expose myself and what would be confidential dealings, there isn't a snowballs chance in hell that they're paying $2M a year for that spot and in fact they are likely paying about 10% of it, with a sizable increase ahead (about 40%) at their 10 year mark with the rest of their rent as "percentage of sales" rent. I guarantee it and can't speak further.

I worked for a company that filed chapter 11 many years ago and Irvine Company bid on our leases to remove us on the first day even though we intended to stay; they said that they do not do business with bankrupt retailers except in extreme circumstances and we didn't qualify. That is probably what happened to Rite Aid here, and the 10 year agreed upon increase would push them deep into the red.

[ClownLoach]

Additional closures per Pacer filing done 10/24, Docket Number 236

Interesting thing about these is they still have vaccine appointments ongoing you can schedule in December etc. no cut off for the vaccine scheduling... (not sure the 6934 store since that is a Bartell, not sure where to search for their vaccine appointments).

No. Store No. Property Address City State Zip Code
1 5232 303 91ST AVENUE, NE STE D401 LAKE STEVENS WA 98258
2 2604 6101 NORTH BROAD STREET PHILADELPHIA PA 19141
3 5525 4525 E. PACIFIC COAST HIGHWAY LONG BEACH CA 90804
4 6934 12946 SE KENT KANGLEY RD KENT WA 98030
5 11008 353 EAST 6TH STREET ERIE PA 16507

That is the newest and nicest Rite Aid in Long Beach, in a fabulous location from a traffic perspective. It was the consolidation of two other stores nearby. I'm absolutely shocked it is closing as it was a ground up Wellness 2.0 build and always busy. Sprouts is building a new store on the opposite corner right now and everything around it is new and successful having been fully rebuilt in the last ten years. Neither the Ralphs or Vons around the corner have pharmacies and the CVS is also brand new but in a bad location that basically funnels the traffic towards Rite Aid. I would have expected the Anaheim St former Thrifty to close before that one. And the CVS just a few blocks South closed less than a year ago due to problems with the landlord who is supposedly redeveloping.

[storewanderer]

That is the newest and nicest Rite Aid in Long Beach, in a fabulous location from a traffic perspective. It was the consolidation of two other stores nearby. I'm absolutely shocked it is closing as it was a ground up Wellness 2.0 build and always busy. Sprouts is building a new store on the opposite corner right now and everything around it is new and successful having been fully rebuilt in the last ten years. Neither the Ralphs or Vons around the corner have pharmacies and the CVS is also brand new but in a bad location that basically funnels the traffic towards Rite Aid. I would have expected the Anaheim St former Thrifty to close before that one. And the CVS just a few blocks South closed less than a year ago due to problems with the landlord who is supposedly redeveloping.

I just looked and it appears that Rite Aid you cite in Long Beach that is closing just got its new logo signs around September 2022. This store looks really nice. Nicer than the Susanville one that was built around the same time. It is painful to see this kind of closure.

So far these are the only closures beyond what was announced in the initial filing because any closure has to be run through the court.

I have no clue what is going on with stores like South Lake Tahoe that show zero vaccine availability after November 15 but I find it hard to believe the vaccine locator knows something that the bankruptcy court doesn't know.

[ClownLoach]

That is the newest and nicest Rite Aid in Long Beach, in a fabulous location from a traffic perspective. It was the consolidation of two other stores nearby. I'm absolutely shocked it is closing as it was a ground up Wellness 2.0 build and always busy. Sprouts is building a new store on the opposite corner right now and everything around it is new and successful having been fully rebuilt in the last ten years. Neither the Ralphs or Vons around the corner have pharmacies and the CVS is also brand new but in a bad location that basically funnels the traffic towards Rite Aid. I would have expected the Anaheim St former Thrifty to close before that one. And the CVS just a few blocks South closed less than a year ago due to problems with the landlord who is supposedly redeveloping.

I just looked and it appears that Rite Aid you cite in Long Beach that is closing just got its new logo signs around September 2022. This store looks really nice. Nicer than the Susanville one that was built around the same time. It is painful to see this kind of closure.

So far these are the only closures beyond what was announced in the initial filing because any closure has to be run through the court.

I have no clue what is going on with stores like South Lake Tahoe that show zero vaccine availability after November 15 but I find it hard to believe the vaccine locator knows something that the bankruptcy court doesn't know.

It's going to be interesting to see how this progresses. I expected only two waves of closures, wave 1 being the stores already closed with dead rent, unprofitable locations where nothing would fix the situation, and locations where Pre filing negotiations indicated the parties were too far apart on rent reductions so they mutually decided to part ways already.

The second wave I expected would be from landlords who refuse to renegotiate lease terms unless a bankruptcy is filed, landlords who act in bad faith and retract Pre-filing agreements as if their deal could have prevented the inevitable filing, as well as large group negotiations with mega-landlords like Kimco. Note when I say Kimco and other mega-landlords specifically they do not own all their centers and are sometimes only a property manager or a representative of the actual owner so if you think there is a discrepancy based on already closed stores that could be why. Mega-landlords would want to negotiate one large deal such as say 40% reduction in rent for X hundred stores but restart all lease dates and also funnel X percent of the new company stock to the mega-landlord. Also there are many landlords who have something like insurance protecting them against lease defaults and they can't claim a loss unless the client is bankrupt so they would not have been able to pre-negotiate before the filing. So I wonder if it was just an administrative error for the 5 stores to have been left off wave 1.

If not then I fear that wave 2 might be piecemeal lists like this of handfuls of stores which is arguably worse for everyone. They should be operating with the idea in mind that they need to get everything that most go closing immediately to retain customer and employee confidence in the go forward plans. Losses of sales will occur and prescriptions will dwindle the longer it takes for customers and employees to learn "their store" is staying open, possibly jeopardizing the whole organization. People can be taught to accept bankruptcy does not always mean going out of business, after all American Airlines, United, Delta, General Motors, and Chrysler are big brands who have restructured. But they will only accept this once they also have the reassurance the stores they shop are staying open, and/or the store they shopped closed but another one is staying open and they'd rather stick with Rite Aid. Until then there will be a literal "run on the bank" as customers move their prescriptions out and key employees get recruited to other retailers. So far I haven't seen the aggressive efforts of the past like "Welcome Former Rite Aid Customers" signs at CVS or Walgreens so at least they're not behaving in a disrespectful or anticompetitive manner... Yet...

The marketing efforts are going to become more costly the longer this plays out, they're going to need to buy "Rite Aid Here to Stay" banners and signage along with digital ads for any store known to be locked in as go forward. They are going to have to run big sales, bounties where legal for new scripts like $25 Gift Card for all new or transferred prescriptions etc. Hopefully this second wave gets locked down in the next few weeks instead of months...

If this is a strategy where they're thinking it's better to piecemeal close stores in wave 2 to prevent headlines like "Hundreds of Rite Aid Stores Closing" I wholeheartedly disagree because of the extended period in which every operating store is perceived to be in jeopardy. Until the court blesses the final restructuring they cannot unequivocally say "this store is staying open" even if they negotiated a new lease deal.

Customers will accept change, but not uncertainty.

In the case of this Long Beach store specifically, I can't help but wonder if someone was pushing the landlord to take over the site and as a result Rite Aid was given the boot. My hunch is there will be Aldi coming soon signs on that location.