Rite Aid Restructuring: CEO, CFO Out Along With 400 Full-Time Jobs

Struggling drugstore Rite Aid Corporation RAD announced Tuesday afternoon an organizational restructuring and leadership change which prompted a lift in stock price.

What Happened

Rite Aid said it will take action to reduce managerial layers and consolidate roles across the company. This should result in annual cost savings of $55 million, $42 million of which will be seen by fiscal 2020. The company's action will result in the elimination of around 400 full-time jobs or more than 20 percent of corporate positions.

The company's actions will offset an expected reduction in revenue as part of its diminishing obligations with Walgreens Boots Alliance Inc WBA, related to the prior sale of stores.

In addition, John Standley will step down as CEO as soon as the board finds an appropriate successor. Several other high-level managerial changes include promoting Bryan Everett from chief operating officer of Rite Aid Stores to COO of the entire company. Chief Financial Officer Darren Karst will be replaced by Matt Schroeder.

Why It's Important

Rite Aid's multiple changes to its structure will better align the company with its present scale and sets the stage for future success, the company said. It's "imperative" to take action to reduce the cost of current operations to transform towards a more efficient and profitable company.

Rite Aid will pay a one-time restructuring charge of $38 million to achieve over the coming months its targeted cost savings.

Rite Aid's stock traded higher by 9.1 percent to 74 cents per share at time of publication.

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Photo credit: Mike Mozart, Flickr