Rite Aid Buys Bartell Drugs

marshd1000
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Rite Aid Buys Bartell Drugs

Post by marshd1000 »

Bartell Drugs, a local, family owned business for 130 years, to be sold to Rite Aid for $95 million

https://www.seattletimes.com/business/l ... 5-million/

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Re: Rite Aid Buys Bartell Drugs

Post by marshd1000 »

Last edited by marshd1000 on October 7th, 2020, 11:22 am, edited 1 time in total.

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Re: Rite Aid Buys Bartell Drugs

Post by SamSpade »

Sad day for the Seattle area. But, I suspect that the shift of workers to their suburban homes, decrease in ability to use any pharmacy you'd like, etc. made this a good time to go.

Some Bartell stores are relatively near Seattle area Rite Aid stores, right? But I haven't lived up there in some years.

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Re: Rite Aid Buys Bartell Drugs

Post by Brian Lutz »

There are quite a few Bartell stores near Rite Aid stores, although there are also a lot less Rite Aid stores in the area than there used to be. Rite Aid entered the area by acquiring and rebranding the Payless stores (which themselves were an acquisition from the former Pay 'n Save chain) but hasn't exactly thrived. I'm guessing the Rite Aid stores would be the ones to close, generally the Bartell stores are a lot nicer and newer than the Rite Aid stores.

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Re: Rite Aid Buys Bartell Drugs

Post by storewanderer »

Note that Rite Aid says they will keep the Bartell name on the stores, which is interesting. It is very interesting that Bartell was sold for only $95 million (67 stores). The financial performance of Bartell must have been quite poor. I suspect the increased operating costs in Seattle where a large chunk of the stores were ($15/hr minimum wage likely no help), increased price competition on front end goods from the likes of Target in the downtown Seattle core, combined with prescription reimbursement pressures must have put serious financial pressure on Bartell who was trying to run a quality operation with a nice mix of merchandise, fair prices, and decent staffing levels. Now Rite Aid can come in, dumb down the stores, increase prices, cut service levels, cut product mix, and maybe turn a better profit.

I have been expecting Bartell to be in play for years and always thought it would be CVS who would buy them out as the store sizes seemed to better match CVS. I never really expected Rite Aid to be a buyer. Interesting move for Rite Aid though, certainly solidifies their position in Washington.

At this point CVS and Walgreens must have decided they didn't even need any more stores to try and gain share as they can just sign agreements with insurance networks to force people to go to their stores for prescriptions even if they do not have a great store count in the market. Or they both decided to pass on this once in a lifetime (and quite low cost per store) major expansion opportunity in Seattle for some reason.

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Re: Rite Aid Buys Bartell Drugs

Post by marshd1000 »

I’m surprised that Rite Aid is buying anything at all since they divested a lot of stores to Walgreens! I’m wondering if they did this to be more attractive to Albertsons so they would get a better price! If that actually happened, I could see Albertsons actually branding the pharmacies inside Haggen as Bartell Drugs. Both seem upscale!

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Re: Rite Aid Buys Bartell Drugs

Post by storewanderer »

marshd1000 wrote: October 7th, 2020, 9:16 pm I’m surprised that Rite Aid is buying anything at all since they divested a lot of stores to Walgreens! I’m wondering if they did this to be more attractive to Albertsons so they would get a better price! If that actually happened, I could see Albertsons actually branding the pharmacies inside Haggen as Bartell Drugs. Both seem upscale!
Same- granted they did not divest, nor did they ever consider divesting, any stores in CA, OR, or WA to Walgreens. They were looking at divesting some stores in ID to Walgreens but those got pulled from the deal at some point (FTC Concerns I think).

I don't think we will see Rite Aid attempt to be sold to Albertsons again. Now that the old Rite Aid CEO Standley is running Walgreens who seems to be somewhat connected to Cerberus, a tie between Albertsons and Walgreens may be more likely.

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Re: Rite Aid Buys Bartell Drugs

Post by Brian Lutz »

Another factor that's likely hurt Bartell is ongoing security problems in their Downtown Seattle locations (high rates of shoplifting and assaults on employees), to the point that they have had to hire off-duty police as full time security in several stores and have closed at least one. I suspect several of those downtown stores also got vandalized and looted during the riots back in May and June.

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Re: Rite Aid Buys Bartell Drugs

Post by buckguy »

The Bartells probably wanted cash rather than stock given the uncertainties of the stock market over the near term and were willing to take a relatively low bid. As for Rite Aid, no one said they makes smart business decisions.

There aren't many regionals left and its not surprising when they do sell. The ones that survive and aren't oldies often have a model that's more of a hybrid with groceries like the Marc's and Discount Drug Mart chains in Ohio or the small quirky Rodman's chain in the DC area which stocks high end, marked down food and wine and has always had a broad range of general merchandise, esp. housewares. Rodman's is known for being an "adventure", esp. the flagship in upper NW DC. There also are some small chains that are in locations that are logistically difficult to source like northern NY State

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Re: Rite Aid Buys Bartell Drugs

Post by storewanderer »

buckguy wrote: October 8th, 2020, 3:13 pm The Bartells probably wanted cash rather than stock given the uncertainties of the stock market over the near term and were willing to take a relatively low bid. As for Rite Aid, no one said they makes smart business decisions.

There aren't many regionals left and its not surprising when they do sell. The ones that survive and aren't oldies often have a model that's more of a hybrid with groceries like the Marc's and Discount Drug Mart chains in Ohio or the small quirky Rodman's chain in the DC area which stocks high end, marked down food and wine and has always had a broad range of general merchandise, esp. housewares. Rodman's is known for being an "adventure", esp. the flagship in upper NW DC. There also are some small chains that are in locations that are logistically difficult to source like northern NY State
This is a decision by Rite Aid's new management so we will see how it goes. Along with decisions like the new logo, cutting (probably unproductive) SKUs like crazy out west, etc.

The articles said Rite Aid has 69 stores in Seattle area which seems like a surprisingly high store count. I wonder if that is the count for the entire state of WA.

Bartell was a much classier operation than Marc's or Discount Drug Mart. Their store upgrades the past 10-15 years were quite good. They seemed to be located in all of the right spots.

There is also Kinney Drug up in NY. There are still a few regional drugstore chains lingering around.

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