When tough times come knocking, sometimes it’s smarter to file for bankruptcy and chart a way out. Embodying that advice, Rite Aid filed for bankruptcy on May 5, 2025, making this its second filing in less than two years. The Chapter 11 filing comes after its earlier restructuring effort in 2023 failed to stabilize the company’s finances, leaving it struggling to keep its head above the water. In continuation of the move, Rite Aid will also conduct layoffs in 2025.
Rite Aid’s second bankruptcy announcement has come with news of store closures and job cuts due to a lack of funding to keep operations up. As part of Rite Aid’s job cuts, the workforce at the Pennsylvania corporate headquarters will be targeted, although no specific numbers on how many will be affected have been disclosed. The company’s bankruptcy announcement represents the situation of the current market, where unpredictability leads the way.
The scale of the Rite Aid layoffs remain unclear but reports suggest that corporate workers will be affected primarily. (Image: Pexels)
What Do We Know About the Rite Aid Layoffs in 2025?
Rite Aid announced its Chapter 11 filing on May 5, 2025, a mere seven months after it emerged from its first bankruptcy in September 2024. The company cited a range of challenges that were inhibiting the businesses from performing to their capacity, mentioning factors like high debts, inflationary pressures, increasing competition, and changing vendor terms. As a result of all the challenges, Rite Aid found its way to its second bankruptcy filing.
According to reports of the petition filed in the New Jersey bankruptcy court, the company entered bankruptcy with liabilities that were estimated to fall between $1 billion and $10 billion. In Rite Aid’s previous bankruptcy filing, it was able to cut $2 billion in debt but this also came with similar consequences of 850 store closures, company sell-offs, and negotiations with all of its partners and creditors.
Now, Rite Aid said that “it is pursuing a strategic and value-maximizing sale process for substantially all of its assets.” The company is set to sell its assets, including prescriptions, pharmacy, and front-end inventory, and is in the process of looking for buyers. Customers can still access online services and visit the stores, although the fate of the stores remains uncertain.
Rite Aid Job Cuts—What Do We Know?
After failing to secure additional funding from investors, Rite Aid is turning to layoffs in 2025, and evidence of the struggle was detailed in a letter to employees by CEO Matthew Schroeder. Following a “dramatic downturn in the economy,” the company announced job cuts that will result in a reduction of the workforce at its corporate headquarters in Pennsylvania. These layoffs at Rite Aid will begin by June 4, 2025, and others at Philadelphia and Etters could also be affected.
Additionally, many Rite Aid stores could either cease operations or be sold off to an interested buyer. Earlier reports suggested that all 178 New York stores were set to close which would have meant that all workers at these centers would be left without a job. However, updates suggest that its remaining stores will stay open during the Chapter 11 bankruptcy process.
The company has around 1,240 stores remaining in the US according to the website, but the fate of these stores is hard to determine. Since its 2023 bankruptcy, the company is said to have closed over 800 stores.
HR Implications and Considerations
While the news of the bankruptcy is clear enough, there is considerable uncertainty around the specific details of the Rite Aid layoffs in 2025. CEO Matt Schroder’s letter to employees highlights the importance of direct messaging and communication, but HR has a key role to play in ensuring information is conveyed to workers, especially in adherence to the WARN Act requirements before layoffs. Providing detailed timelines for the job cuts and outlining the resources available to workers is critical during such uncertain times.
As corporate layoffs loom on the horizon, HR must identify and retain critical talent to maintain operations through the Chapter 11 filing and sale procedures. Important decisions need to be made at such a critical juncture, and without a team of professionals at the helm, it could become twice as hard to emerge from the situation successfully. This is important not just for Rite Aid, but all businesses that find themselves in a similar position.
Rite Aid’s struggles reflect broader challenges in the retail pharmacy sector. Other rivals like Walgreens and CVS have also faced store closures and layoffs since 2024. With competition from e-commerce giants and other big players, smaller businesses will have to build a team of tightly-knit workers who can weather the storm and help sustain a loyal customer base long term.
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