Rite Aid exec: Impossible to stop NYC store thefts
Rite Aid shares plunged 28% in the Thursday session after the company reported a larger-than-expected loss.
A man walks out of a New York City drugstore with a bag full of stolen goods in broad daylight.
Rite Aid reported a very difficult quarter on Thursday when the pharmacy chain reported a much larger-than expected loss, sending shares plunging 28% in the session.
The loss was related to costs connected to its store-closing plan.
Some of those closures affected stores in New York City, where the retailer has been the victim of crime, specifically shoplifting.
Rite Aid’s chief retail officer Andre Persaud addressed the issue on the company’s earnings call Thursday, saying it is just about impossible to stop stealing in New York City shops.
NYC RITE AID TARGETED BY SHOPLIFTERS CLOSES, WITH ANOTHER SET TO CLOSE SOON AFTER
A gate is used to lock items at a pharmacy and convenience store in New York City. (Photo by Spencer Platt/Getty Images / Getty Images)
"I think the headline here is the environment that we operate in, particularly in New York City, is not conducive to reducing shrink just based upon everything you read and see on social media and the news in the city" he said.
Shrink, is a term used by retailers to describe theft.
The drug store chain said front-end gross profit was impacted by a $5 million increase in shrink particularly in urban locations.
A person walks outside of Rite Aid pharmacy in New York City. (Photo by Noam Galai/Getty Images) (Noam Galai/Getty Images / Getty Images)
Overall, Rite Aid reported a net loss for the quarter of $331.3 million, or $6.07 per share, compared with a net loss of $100.3 million, or $1.86 per share a year earlier.
The loss included a $252.2 million goodwill charge related to its pharmacy-services segment. When taking out one time items, adjusted losses came in at 63 cents a share. Analysts surveyed by FactSet had been expecting an adjusted per-share loss of 50 cents.
RITE AID DENIES CLAIMS THAT NYC STORE CLOSURES LEADING TO JOB LOSS AMID HIGH-PROFILE NYC ROBBERIES
Earlier this year, the chain closed stores in New York's Hell's Kitchen neighborhood and another on Manhattan's Upper West Side.
In January, a New York Post reporter spotted a brazen shoplifting incident at the Hell’s Kitchen location, where "store sources" told the outlet people have stolen over $200,000 in store goods over a couple of months.
Rite Aid President and CEO Heyward Donigan (Getty / iStock)
At the Upper West Side location, actor and comedian Michael Rapaport said he was at the store in January when he watched a man load two bags full of allegedly stolen goods. Rapaport captured video footage that showed the alleged thief passing a store security guard as he waltzed out the front doors holding the bags of loot.
MICHAEL RAPAPORT RETURNS TO NYC RITE AID WHERE HE FILMED ALLEGED SHOPLIFTER
A Rite Aid spokesperson previously told FOX Business that the stores are closing "for a number of reasons" based on months-long reviews that were carried out "across the full footprint of 2,500 stores."
In all, the store closing plan meant the shutting of 63 stores nationwide, roughly 2% of the total number of Rite Aid locations.
Persaud added that the retailer is making progress in thwarting thieves.
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"Over the last 24 months, the team has done incredible work on improving our product protection, improving our organized retail client program" he noted.
Still, stealing is complicating the inflationary environment as well the retailer warned.
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"We experienced unexpected headwinds this quarter from front-end shrink, particularly in our New York urban stores. Given the current economic environment, we expect to see a cautious consumer in the back half of the year" said CEO Heyward Donigan.
FOX Business' Stephanie Pagones contributed to this report.