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Rite Aid Case

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  • Pages: 3
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  • Category: Drugs

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Rite Aid has more than 4,900 stores in over thirty one states, but it all started with just one. September 1962, Thrif D Discount Center in Scranton, Pennsylvania opened. What started as a store front, expanded expeditiously. By 1965, Thrif D Discount Center had expanded to five states and was officially named Rite Aid Corporation. It was in this year that the company made its first public offering and started trading on the American Stock Exchange. Business was flourishing for the company, by 1972 Rite Aid operated 267 stores in ten states. By 1981, Rite Aid had become the third largest retail drugstore chain in the country, in 1983, the company had surpassed the $1 billion sales mark for the first time. Twenty five years after opening its first store, Rite Aid had acquired 420 stores. Rite Aid has been pinnacle in acquisitions throughout its history.

Thrifty PayLess Holdings, Incorporated, K&B, PCS Health Systems, and Brooks Eckerd are all companies that have been a part of the plethora of Rite Aid acquisitions. “In January 1999, Rite Aid formed a strategic partnership with General Nutrition Companies, Incorporated, the largest specialty retailer of vitamins, mineral supplements, sports nutrition and herbal products. This partnership created GNC stores within Rite Aid drugstores across the country (Rite Aid 2010).” This has proven to be a marriage made in heaven, creating a co marketed line of vitamins and nutritional supplements called PhamAssure sold by both companies. Rite Aid has kept up with its competitors, Walgreens and CVS, as well as kept up with the times by offering prescription orders online at

http://www.riteaid.com/pharmacy/ and same day pickup.

Rite Aid is the third largest retail drugstore chain in the United States based on revenues and number of stores. In their stores, they sell prescription drugs and a wide assortment of other merchandise, which is referred to as ‘‘front-end’’ products. “In fiscal 2009, prescription drug sales accounted for 67.2% of total sales. It is believed that pharmacy operations will continue to represent a significant part of business due to favorable industry trends, including an aging population, increased life expectancy, anticipated growth in the federally funded Medicare Part D prescription program as ‘‘baby boomers’’ begin to enroll in 2011 and the discovery of new and better drug therapies. Approximately 28,000 front-end products, which accounted for the remaining 32.8% of total sales in fiscal 2009, are offered. Front end products include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, beverages, convenience foods, greeting cards, seasonal merchandise and numerous other everyday and convenience products, as well as photo processing (Rite Aid 2010).” Rite Aid’s headquarters is located at 30 Hunter Lane, Camp Hill, Pennsylvania and their website is http://www.riteaid.com/. Their common stock is listed on the New York Stock Exchange under the trading symbol of ‘‘RAD’’. They were incorporated in 1968 and are a Delaware corporation.

One of the highlighted points contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview include the fact that Rite Aid incurred a $2,915.4 million dollar net loss for fiscal 2009. Some key factors that impacted that net loss are 1) a write-off of goodwill, 2) income tax valuation allowance adjustments, 3) store closing and impairment charges, 4) LIFO charges, and 5) acquisition of Brooks Eckerd. Auditors from Deloitte and Touche LLP, of Philadelphia, Pennsylvania, gave Rite Aid an unqualified opinion on their internal control over financial reporting, as well as for financial statements and financial statement schedule.

Mary F. Sammons, Chairman and Chief Executive Officer, along with the rest of Rite Aid’s Board of Directors have a plan to make fiscal 2010 more profitable than the latter. Those plans include unlocking the value of a diverse store base, improve customer loyalty by improving customer and associate satisfaction, generate positive cash flow by taking unnecessary costs out of the business and improving operating efficiencies and reduce debt by way of the generation of operating cash flow and improvements in working capital management. By executing on these goals Rite Aid feels they can improve stockholder value even in a difficult economic environment.


Rite Aid. (2010). Annual reports/proxy statements. Retrieved March 15, 2010, from http://www.riteaid.com/company/investors/anrpts/index.jsf

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