Top Rite Aid execs out, 400 jobs cut amid restructuring
Rite Aid Corp.'s top three executives are leaving and the embattled drugstore chain is cutting 20 percent of its corporate staff as part of a restructuring plan aimed at reducing costs.
The company on Tuesday said CEO John Standley, COO Kermit Crawford and CFO Darren Karst will leave the company, along with about 400 other full-time employees at company headquarters in East Pennsboro Township and across the organization.
About two-thirds of those cuts will take place immediately, while the rest will occur by the end of the company's fiscal 2020 year.
Rite Aid, which is coming off two failed mergers, the sale of more than 1,900 stores to rival Walgreens and a recent makeover of its board of directors, said it needs to reduce its workforce to align more closely with its smaller store count.
Retailers like Rite Aid have been under increasing investor pressure to cut costs, expand their reach and differentiate themselves amid growing competition from online sales, namely the growth of Amazon.
Rite Aid, which expects annual cost savings of about $55 million from the restructuring moves, also is looking up at much bigger rivals like Walgreens and CVS.
"These are difficult decisions and we recognize the implications they have for individuals across our organization," said Bruce Bodaken, chairman of the company's board. "However, it is imperative we take action to reduce the cost of current operations and become a more efficient and profitable company."
The company said Standley will stay on until a new CEO is appointed. Karst also will remain until the spring to support the leadership transition.
As part of the leadership moves, Bryan Everett, the COO of Rite Aid stores, has been promoted to COO of the whole company. Matt Schroeder, the chief accounting officer and treasurer, has been promoted to CFO.
In addition, Brian Hoover, group vice president and controller, has been elevated to chief accounting officer. Jocelyn Konrad, executive vice president of pharmacy, will now serve as executive vice president of pharmacy and retail operations.
Meanwhile, Derek Griffith, executive vice president of store operations, is leaving the company. Rite Aid also said it will consolidate other senior leadership roles, which will result in other unannounced cuts.
The company said the other 400 cuts will come through a reduction in layers of management and consolidation of roles across the organization.
The company's stock price rose in after-hours trading with the reorganization news. The company in January announced a reverse stock split plan hoping to remedy its ailing stock price, which closed at 68 cents per share on Tuesday.