Rite Aid Corp. (RAD) stock has set its growing footprint on Wednesday as investors were satisfied with the top management shake-up. On late Tuesday, about 400 corporate jobs were planned to be laid off and the company’s chief executive John Standley would step down along with CFO Darren Karst and COO Kermit Crawford from the drugstore chain.
The shake-up has remained positive among the investors and traders. They believed the top management to be behind the nine-year stint and two failed merger attempts, which left the stock to be grounded below $1. Standley, who has been in the company as CEO since 2010, will remain until a successor is named.
Meanwhile, the company appointed Chief Accounting Officer Matt Schroeder as the new Chief Financial Officer, replacing Darren Karst. Also, Rite Aid Stores COO Bryan Everett has been named as the Chief Operating Officer of the company, replacing Kermit Crawford.
Rite Aid would layoff about 400 corporate positions located at its headquarters and across field operations. This would impact more than 20% of corporate jobs and the company expects to incur a one-time charge of $38 million. However, annual savings are anticipated to be about $55 million from the restructuring, of which about $42 million would be realized within fiscal 2020.
Investors remained concerned over the direction of the company and the unrest gap is widening. Traders believed the stock to be a good investment at this point of time and the current levels called for a buy. But, the majority of the analysts recommended a “hold” rating on the stock with an average price target of $0.75 per share.
The company has experienced losses in three out of last four quarters and this led to the sale of more than 1,900 stores to Walgreens Boots Alliance in 2017. In August 2018, Rite Aid and Albertsons Companies had terminated a $24 billion merger after Rite Aid’s shareholders opposed the deal.
Also read: Rite Aid stock plunges to 9-year low
The future of the drugstore chain turned gloomy after weak third-quarter results. Lower discontinued operations hurt the bottom line while the adjusted earnings climbing 73% on the progress of growing retail and pharmacy benefits management businesses.
In addition, the struggle to survive in the drugstore industry has been rising each day as online companies including Amazon (AMZN), CVS Health (CVS), and Walgreens Boots Alliance (WBA) have been giving a stiff competition. The road to recovery is tough but Rite Aid could get through it with the aid of proper top-level management.
Shares of Rite Aid closed Wednesday’s regular session up 6.10% at $0.72 on the NYSE. The stock has fallen over 57% in the past year and over 20% in the past three months.