Only months after Rite Aid‘s (NYSE:RAD) planned merger with Walgreens Boots Alliance (NASDAQ:WBA) disintegrated, Rite Aid’s CEO Ken Martindale left the company to become the CEO of GNC Holdings, Inc.Â earlier this month. Following the departure, Rite Aid Chairman Joseph Standley took over full control of the CEO role and on Thursday, he announced he’s hired Kermit Crawford to serve as Rite Aid’s new president and chief operating officer.
Rite Aid’s C-suite shuffle creates a bit of uncertainty, but it may not be bad news for the embattled retail-pharmacy chain. Ultimately, Martindale was responsible for failing to get Rite Aid’s merger with Walgreens across the regulatory finish line; perhaps a shake-up at the top is exactly what’s necessary to breathe fresh life into this struggling chain.Â
What’s the story?
Walgreens may no longer beÂ acquiring Rite Aid lock, stock, and barrel, but it has agreed to acquire about 2,000 Rite Aid stores in an all-cash deal valued at roughly $4.4 billion. The deal has gotten an OK from regulators, and stores will begin being transferred to Walgreens soon.
The companies expect all of Rite Aid’s stores will be in Walgreens’ hands by early next year.Â At that point, Rite Aid’s C-suite will finally be able to stop focusing on mergers and acquisitions (M&A) and start focusing again on winning back customers.Â Fortunately, management will have more financial flexibility to do that once this deal is done.
The company plans to use its cash windfall from Walgreens to solidify its balance sheet by paying down a good portion of its debt. A history of acquisitions has left Rite Aid owing more than $7 billion to its creditors, and despite past debt restructurings, the company’s still spending over $100 million per quarter in interest.
Paying down Rite-Aid’s debt should boost margin, and that should allow management to increase…