Rite Aid store transfers pass halfway mark

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Rite Aid store transfers pass halfway mark

The Rite Aid-Walgreens transition is on track to be completed by spring.

Camp Hill, Pa.-based Rite Aid has successfully transferred 1,114 stores to Walgreens Boots Alliance and has received cash proceeds of $2.424 billion, which the company continues to use to reduce debt. The drug store chain said it expects to finish the transfer by spring.

“As we work to complete this process, we remain focused on opportunities to build our business while delivering a great experience to our customers and patients and driving value for our shareholders,” Rite Aid chairman and CEO John Standley said.

Now that the halfway point is passed, Rite Aid has gained 10-year access to the Walgreens Boots Alliance Development generics purchasing organization, which Rite Aid president and COO Kermit Crawford told the J.P. Morgan Healthcare Conference in January would play a big role in keeping the chain competitive.

“This is huge,” Crawford said. “One of the concerns we’ve heard is ‘You’re a smaller company, are you going to be able to buy as well?’ This gives us the confidence that we will be able to buy our generic purchasing at a very competitive rate.”

Walgreens purchased a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for $4.375 billion in cash.

Most of the stores being sold to Walgreens are in the southeastern U.S., leaving Rite Aid with the majority of its stores on the East and West coasts.

In addition to allowing Rite Aid to reduce its debt, the sale and ongoing transition of stores bolstered the chain’s profits for the third quarter. Net income rose to $81.03 million, in the quarter ended Dec. 2, from $15.01 million.