Customers and employees of Bartell Drugs awoke Monday to the unwelcome prospect of more store closures following the news that Bartell’s corporate parent Rite Aid filed for bankruptcy.
On Sunday, Pennsylvania-based Rite Aid filed Chapter 11 bankruptcy, which will give the struggling retailer breathing room as it tries to climb back from billions of dollars in losses and debt.
But as part of that restructuring, Rite Aid, which bought Bartell in 2020, plans to “close certain underperforming stores to further reduce rent expense and strengthen overall financial performance,” a spokesperson said in an emailed statement Monday.
Rite Aid declined to say which or how many of its roughly 2,100 locations, including 58 Bartell and 36 Rite Aid stores in the Seattle area, would close. But Rite Aid is reportedly “rejecting” 168 leases as part of the bankruptcy and has previously discussed closing 400 to 500 locations, according to reports by The Wall Street Journal.
At least one industry analyst thinks Bartell Drug could be especially vulnerable because many locations are in high-cost urban neighborhoods with nearby competitors.
The moves have added to the anxieties of some Bartell customers and staff, who have already seen a wave of closures since Rite Aide purchased the family-owned Seattle drugstore company.
“I was worried when they took over Bartells — that it would be the end of this wonderful store,” said Seattle resident Karen Smith, who was shopping Monday morning at the Bartell location in Seattle’s University Village.
At several Seattle-area locations, staff and managers said they hadn’t been given any specific news about closures but were aware the company might be closing locations with lower sales or other challenges.
“We’re fine,” said Khadee Echague, assistant store manager at the University Village Bartell, which was busy on a Monday morning despite the heavy rain.
At other locations, staff seemed uncertain.
“They don’t let me know,” said a pharmacist at one North Seattle Bartell. He said he’d only heard about the bankruptcy in the news and that the company hadn’t provided any information about his location. “I’m the last person to find out.”
He asked not to be named because he wasn’t authorized to speak with the media.
Struggling company in a troubled industry
Sunday’s bankruptcy filing had long been expected. Rite Aid has struggled for years in a drugstore market that has been dominated by rivals like CVS and Walgreens. It has also faced growing competition from online pharmacy players.
Rite Aid was also looking at potentially costly government and private lawsuits alleging it contributed to the opioid epidemic by oversupplying painkillers.
Over the past six years, Rite Aid reported nearly $3 billion in net losses and had accumulated more than $3 billion in long-term debt, according to GlobalData, an analysis company. Rite Aid also faces huge unpaid bills to suppliers.
“Rite Aid simply isn’t a viable entity,” said Neil Saunders, a GlobalData managing director, in a research note Sunday, adding that the company was barely keeping afloat on the “fumes of cash it generates in the day-to-day business.” “
The pending lawsuits for opioid settlements, which by our estimates could end up costing the company around $1 billion, are simply the coup de grâce, ” he wrote.
Other pharmacy chains have also faced opioid litigation, but Rite Aid is the first to try to use bankruptcy protection to lessen the financial impacts of opioid-related lawsuits, according to The Wall Street Journal.
Still, if Rite Aid’s bankruptcy filing had been long expected, its arrival may seem especially galling for Bartell staff and customers.
It was almost three years ago to the day that Bartell announced it would be sold to Rite Aid, for $95 million.
The marketplace had become so dominated by large companies that even a well-established local player like Bartell, with loyal customers and 67 locations in King, Snohomish and Pierce counties, couldn’t remain profitable.
“We felt that this was the only answer,” George D. Bartell, whose grandfather, George H. Bartell Sr., started the company in Seattle’s Central District in 1890, said when the sale was announced Oct. 7, 2020. “It was getting more difficult for regional operators to compete in the market.”
At the time, Rite Aid officials assured loyal Bartell customers that the sale wouldn’t affect the Seattle company’s famous customer service or its often quirky offerings, which feature locally made products.
“Rite Aid is completely committed to keeping Bartell’s Bartell’s,” Ken Mahoney, Bartell’s senior vice president of operations, said in an August 2021 interview.
But by then, some Bartell customers were already complaining of delays in prescriptions, empty shelves and staff shortages.
Speaking Monday, Northgate resident Jean Trent, 78, said she stopped using the Bartell in Seattle’s Roosevelt neighborhood after the pharmacy staff changed.
“The Bartell Drugs that I knew a couple of years ago had really great pharmacists,” Trent said. “They knew what they were talking about. They understood the drugs, and they weren’t back there gasping for air trying to get to the next client.”
Even as Bartell started to get some of its supply chain and staffing problems under control last year, Rite Aid began shutting down locations as part of a broader series of closures.
At least nine Bartell locations have closed since the Rite Aid sale; September alone saw the shuttering of locations in Des Moines and White Center as well as the location in Seattle’s Uptown neighborhood, which had one of the last 24-hour pharmacies in the Seattle area.
A Rite Aid spokesperson declined to say whether the company was considering additional closures of Bartell locations or Seattle-area Rite Aid locations.
But Saunders with GlobalData said several factors may make Bartell locations especially vulnerable.
First, the stores “are slightly more urban and suburban, and there’s a lot more competition generally in those locations,” Saunders said. If Rite Aid wants to prioritize stores with the greatest potential for increased sales, those urban locations may not fare well, Saunders said.
At the same time, many urban locations “will be much more expensive to run just because they’re in a city location, and the rents will be higher,” which might make them candidates for a cost-cutting purge, Saunders said.
In his research note, Saunders worried that unless competitors decided to buy any closed Rite Aid stores, the bankruptcy could result in “some holes in the pharmacy landscape and potentially runs the risk of pharmacy deserts opening up in some locations.”
Rite Aid said that customers at closed stores will have their prescriptions transferred to another Rite Aid or a nearby pharmacy “so that there is no disruption of services.” The company also said that it will transfer employees from closed locations “to other Rite Aid locations where possible.”
One silver lining of previous closures is that it has allowed some remaining locations to pick up much-needed staff.
Some customers, however, worried the bankruptcy signaled more losses and disruption. Smith, the University Village Bartell shopper, had already seen her preferred Bartell in downtown Seattle close and feared another round of closures. “Really, I don’t know what I’m going to do.”
Longtime Crown Hill resident Beth Gardner, 57, seemed more resigned to the changes.
She said she used to shop at the Bartell in Seattle’s Greenwood neighborhood once or twice a month. But after the Rite Aid acquisition, she said, Bartell started to change, so she transferred her prescriptions to Bob Johnson Pharmacy on Northwest 85th Street, less than a mile away from Bartell.
Gardner said she still comes into the Greenwood Bartell for photo services, which she was using Monday, but added that if the location closes as a result of the restructuring, she won’t miss it.
Since the sale to Rite Aid, Bartell “just doesn’t feel like a small or friendly pharmacy,” Gardner said.
Others had already adjusted to a post-Bartell world. Trent, the former customer the Roosevelt Bartell, ended up at the Rite Aid in Wedgwood, where she said she’s had to accustom herself to long waits.
Her old Bartell pharmacists seemed able to handle customer orders with dispatch, “you have to wait 20 minutes in line at the Rite Aid now just to get to the front of the line and ask them a question or get your drug.”
