Rite Aid said it will part ways with its top managers and shed about 400 jobs, cutting about $55 million in costs as the drugstore chain tries to turn itself around.
Chief Executive Officer John Standley, Chief Operating Officer Kermit Crawford, and Chief Financial Officer Darren Karst will all step down, Rite Aid said in a statement Tuesday.
“It is imperative we take action to reduce the cost of current operations and become a more efficient and profitable company,” Bruce Bodaken, chairman of the company’s board of directors, said in a statement. “The board believes that now is the right time to undertake a leadership transition.”
Rite Aid has gone from a bastion of the American drugstore landscape to a shell of its former self after selling a large chunk of its stores to rival Walgreens Boots Alliance. It has reported a loss for three quarters in a row, while analysts have cut their ratings. The stock now trades for less than a dollar—down from nearly $50 in 1998.
In the past two years, Rite Aid has seen multiple mergers fall through, leaving an uncertain future for the company with no clear end game. In 2017, a proposed tie-up with Walgreens fell apart amid antitrust scrutiny by U.S. regulators. In August 2018, another proposed merger, with supermarket chain Albertsons, was called off after two prominent proxy advisers recommended that shareholders vote against it.
“These are dark times for Rite Aid shareholders,” said Ross Muken, an analyst at Evercore ISI. “Given the elevated leverage levels and likely declining profit line, we think the outlook here is pretty dire.”
In a statement after the announcement, Rite Aid spokesman Chris Savarese said that the changes aim at “more closely aligning the structure and leadership of the company with the scale of its operations.” The departures “are not at all a result of any wrongdoing,” he said.
The job cuts will eliminate about 20% of the corporate positions at the company’s Camp Hill, Pa. headquarters and elsewhere. About two-third of the cuts will happen immediately, with the rest by the end of fiscal 2020. The changes will result in a $38 million charge.
Rite Aid shares were volatile in late trading on Tuesday, swinging between gains and losses. The shares have lost 60% of their value in the last 12 months.
“We’re not surprised the board decided that a fresh perspective is needed,” said Jonathan Palmer, an analyst at Bloomberg Intelligence. “The departing management team distinguished themselves with two failed merger attempts while retail pharmacy market became increasingly more difficult.”