Rite Aid exec: Impossible to stop NYC shoplifters
A man walks out of a New York City pharmacy with a bag full of stolen goods in broad daylight.
Rite Aid reported a very difficult quarter on Thursday as the drugstore chain reported a much larger-than-expected loss, sending shares down 28% in the session.
The loss was related to costs related to the store closure plan.
Some of these closings affected stores in New York City, where the retailer has been a victim of crime, particularly shoplifting.
Rite Aid Chief Retail Officer Andre Persaud addressed the issue on the company̵[ads1]7;s earnings call Thursday, saying it is nearly impossible to stop shoplifting in New York City stores.
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A gate is used to lock merchandise at a pharmacy and convenience store in New York City. (Photo by Spencer Platt/Getty Images/Getty Images)
“I think the headline here is that the environment that we operate in, especially in New York City, is not conducive to reducing shrink just based on everything you read and see on social media and the news in the city,” he said.
Shrink, is a term used by retailers to describe theft.
The pharmacy chain said gross profit was impacted by a $5 million increase in shrinkage, particularly in urban areas.
A person walks outside the Rite Aid pharmacy in New York City. (Photo by Noam Galai/Getty Images) (Noam Galai/Getty Images/Getty Images)
Overall, Rite Aid reported a net loss for the quarter of $331.3 million, or $6.07 per share, compared with a net loss of $100.3 million, or $1.86 per share a year earlier.
The loss included a goodwill charge of $252.2 million related to the pharmacy services segment. Withdrawal of non-recurring items resulted in an adjusted loss of 63 cents per share. Analysts surveyed by FactSet had expected an adjusted loss per share of 50 cents.
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Earlier this year, the chain closed stores in the Hell’s Kitchen district of New York and another on Manhattan’s Upper West Side.
In January, a New York Post reporter discovered a brazen shoplifting spree at the Hell’s Kitchen location, where “store sources” told the outlet that people have stolen over $200,000 in store merchandise over the course of a couple of months.
Rite Aid President and CEO Heyward Donigan (Getty/iStock)
At the Upper West Side location, actor and comedian Michael Rapaport said he was in the store in January when he saw a man loading two bags full of allegedly stolen merchandise. Rapaport took video footage that showed the alleged thief passing a store security guard as he waltzed out the front doors with the stolen bags.
MICHAEL RAPAPORT RETURNS TO NYC RITE AID WHERE HE FILMED THE ALLEGED KJÖPEL
A Rite Aid spokesperson previously told FOX Business that the stores are closing “for a variety of reasons” based on months-long assessments conducted “across the entire footprint of 2,500 stores.”
In all, the store closing plan meant the closure of 63 stores nationwide, about 2% of the total number of Rite Aid locations.
Persaud added that the retailer is making progress in preventing thieves.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| ADVICE | RITE AID CORP. | 5.05 | -2.00am | -28.37% |
“Over the last 24 months, the team has done incredible work improving our product protection, improving our organized retail customer program,” he noted.
Still, the inflationary environment complicates stealing, the dealer also warned.
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“We experienced unexpected headwinds this quarter from front-end shrinkage, particularly in our urban New York stores. Given the current economic environment, we expect to see a cautious consumer in the back half of the year,” said CEO Heyward Donigan.
FOX Business’ Stephanie Pagones contributed to this report.
