The drug store chain said on Tuesday it will replace three top executives, including CEO John Standley, who has led Rite Aid since 2010, as well as the company's chief financial and operations manager. Standley will remain CEO of Rite Aid appointing a successor.
Rite Aid also said it would eliminate around 400 full-time positions, or 20% of the positions at the company's headquarters. Rite Aide expects to save around $ 55 million a year from the restructuring plan.
Wall Street approved by the changes. Rite Aid's ( RAD )
share rose 4% during the Wednesday deal ̵
1; to around 70 cents per share. Rite Aids stock fell below $ 1 in December.
"It is positive in light of the intense competition pressures the company is facing," said Mickey Chadha, an analyst at Moody's, about the Rite Aids move.
Rite Aid has struggled to keep up with larger rivals such as CVS ( CVS ) and Walgreens. ” class=”media__image” src=”http://cdn.cnn.com/cnnnext/dam/assets/190215174143-cvs-healthub-3-large-169.jpg”/>
( WBA ) It has lost nearly $ 5 billion in revenue since 2015, closed stores and the stock price has suffered.
More recently, Rite Aid consolidated its competitors to lower costs, increase profits, and stave off pressure from Amazon ( AMZN ) . CVS agreed to buy the health insurance company Aetna in 2017 for $ 69 billion and received government approval last year. Express Scripts and Cigna also closed their $ 67 billion last year's deals.
The changes and redundancies come months after Albertson's attempt to buy Rite Aid collapsed. Standley signed a deal with Albertsons in February last year, which would have created a new company with about $ 83 billion in annual sales and 4,900 locations across the United States. But the two companies called off the deal after repayment from shareholders complaining of the undervalued Rite Aid.
"We've heard the views of our shareholders," Standley said in August.
Rite Aid was an acquisition target even before Albert's.
Walgreens wanted to buy all Rite Aid in 2015, but federal regulators nixed this deal for antitrust reasons. In 2017, the two companies announced a scaled-down version for nearly 2,000 of Rite Aids stores. It left Rite Aid with around 2600 stores.