Rite Aid to close 28 stores in Nevada

Wall Street is hammering Rite Aid, but it's the drugstore chain's customers and employees in Nevada who will feel the pain.

On Friday the retailer announced it would close all but one of its 29 stores in Nevada, including all its stores in the Las Vegas area.

The decision will put about 400 local retail employees out of work and send former customers scrambling to Walgreens, the retail pharmacy that bought Rite Aid's prescription list.

A Rite Aid spokeswoman said the stores will be closing over the next three months, plenty of time for prescriptions to transfer to Walgreens.

Until then Rite Aid will prepare for the shutdown by selling off merchandise and advising employees on where they can find help looking for new jobs.

Rite Aid spokeswoman Karen Rugen said the company, which has more than 5,000 stores in 31 states, is leaving Las Vegas because it was unable to make a profit even though it operated during an era of unprecedented population growth and economic expansion in Southern Nevada

"This is a non-core market for us that hasn't been profitable for us," Rugen said.

She said most of the Rite Aid employees are members of the United Food and Commercial Workers Union Local 711 and the International Brotherhood of Teamsters Local 995. Representatives of the unions did not return calls for comment.

Nonunion grocer Fresh & Easy Neighborhood Market will take over 10 of the Rite Aid locations, a company spokesman said. The chain, a subsidiary of United Kingdom-based Tesco, recently opened six stores in the Las Vegas area. The company did not disclose which former Rite Aid locations it will occupy.

Walgreens spokesman Michael Polzin said it will take about a week for the chain to import the prescription files it bought from Rite Aid.

"We have a system to transfer it over," Polzin said. "It is something we do, literally, hundreds of times a year."

Polzin also said the influx of customers Walgreens expects from the deal could provide an opportunity for unemployed former Rite Aid workers. Pharmacy workers have the best shot of being hired by Walgreens, Polzin said.

"We will be very interested in speaking with them," he said.

Nonpharmacy workers would need to apply for jobs through the typical process and former Rite Aid employees won't get an inside track, Polzin said.

Although 2007 was a rough year for drugstore chains in general, Walgreens has managed to grow in Las Vegas. Since it moved to Southern Nevada in 1996 Walgreens has grown from five to 53 stores in the market.

Rite Aid also moved to the market in 1996 when it purchased about 1,000 Thrifty Payless stores on the West Coast, Rugen said.

Nationally, the drugstore chains CVS Caremark, Walgreens and Rite Aid fared poorly in 2007.

Walgreens had its weakest December since 1990, which prompted a 6 percent decline in its stock, Rite Aid stock is at its lowest point since 2003 following its own December sales decline. CVS sales in December rose 1.8 percent. Analysts had predicted a sales increase of 4.5 percent.

Rite Aid stock closed Friday at $2.15 per share on the New York Stock Exchange, well below its 52-week high of $6.74. Walgreen Co. ended the day at $34.29, almost $16 below its 52-week high of $49.10. CVS closed at $37.27; the company's 52-week high was $42.60.

"Drug retailers are not immune to the general economic pressures that are occurring across many other areas of retail," Robert Summers, an analyst at Bear Stearns & Co., wrote in a research note and quoted in the Chicago Tribune.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or (702) 477-3861.