Rite Aid drops corporate positions after COVID-19 losses in first quarter

Ioannis Pashakis//June 29, 2020

Rite Aid drops corporate positions after COVID-19 losses in first quarter

Ioannis Pashakis//June 29, 2020

Rite Aid recently eliminated 254 corporate office positions as it looks to reduce cost amid growing COVID-19 related expenses.

Last week, the Camp Hill-based pharmacy chain released its operating results for its first fiscal quarter ending May 30, 2020. The report showed that Rite Aid’s first quarter adjusted EBITDA from continuing operations dropped slightly in the past year. The company’s EBITDA was $107.4 million this quarter, compared to $110.3 in the same quarter last year.

Rite Aid’s first quarter adjusted EBITDA was expected to be higher than the year before it, but was struck by a $30 million net negative impact due to COVID-19 related spending.

Increased cleaning costs to create safe environments for associates and customers as well as a decline in acute prescriptions were just some of the reasons for the company’s $30 million loss, according to Heyward Donigan, president and CEO of Rite Aid.

“No matter the challenge, we can execute our strategy and deliver day-to-day operational excellence in the face of a pandemic,” Donigan said.

For the 2021 fiscal year, Rite Aid said it will be taking steps to reduce expenses, such as shrinking advertising, rent, travel and call center expenses. The reductions have also resulted in the company cutting 254 corporate office positions in both its retail pharmacy and pharmacy services segments.

The reductions are planned to save over $40 million.

The company has not announced how many of those positions will be cut from Rite Aid’s Camp Hill headquarters.

In last week’s report, Rite Aid noted that it decreased its net loss from continuing operations from $99.3 million during the same quarter last year to $72.7 million this year.

The company’s total revenue this quarter was $6.03 billion– an 11% increase from its $5.37 billion in revenue in the prior year’s quarter.

To support growth in Rite Aid’s store and distribution center teams during the pandemic, the company hired approximately 6,000 full and part-time associates across the country.

Donigan thanked the company’s employees for their work in recent months during the pandemic.

“Our retail pharmacy teams responded to the COVID-19 crisis by taking immediate action to maintain our supply chain and stay in stock, enhance our digital experience, quickly implement safety measures, keep our stores open and provide outstanding service, all of which helped us drive double-digit front-end sales growth and gain retail market share,” Donigan said.

Following the report, Rite Aid (NYSE:RAD) stocks jumped from $12.87 to $16.29. The company’s stocks were at $17.31 end of day on Monday.