Rite Aid Hiring New Exec Team, Accounting Firm
Ailing drugstore retailer Rite Aid Corp. is expected to announce today that it has hired both a new senior management team primarily made up of grocery store executives and a new accounting firm in an attempt to revive the troubled company and regain credibility on Wall Street.
Longtime supermarket executive Robert G. Miller, 55, will become Rite Aid’s new chairman and chief executive. Mary Sammons, 53, a former chief executive of Fred Meyer Stores, will be named president and chief operating officer.
In addition, the Camp Hill, Pa.-based drugstore chain said it has hired Deloitte & Touche as its new auditing firm to replace KPMG, which resigned abruptly in November.
“This company faces significant challenges, but Rite Aid remains a leader in the retail drug industry,” said Miller, who spent 30 years with supermarket chain Albertson’s Inc. and was most recently the former chief operating officer at Kroger Co., one of the nation’s largest supermarket operators.
“We think there is a big opportunity here,” Miller said in an interview Sunday. “We’re going to get it running well. We’re not out to sell the company.”
Miller will succeed acting Chairman Leonard Green, whose Los Angeles investment firm Leonard Green & Partners owns 11% of Rite Aid. Miller also will replace Timothy Noonan, the Rite Aid president who was interim chief executive and will remain with the firm.
“All these individuals have outstanding track records and expertise in building and running successful, cost-efficient operations in large-format, pharmaceutical and general merchandise stores,” Green, 66, said.
Rite Aid, with $14 billion in annual revenue and 3,800 stores nationwide, has been plagued by executive departures and controversy this year.
Martin Grass, Rite Aid’s former chairman and chief executive, left the company earlier this year after the drugstore said it would need to restate several quarters of financial results. Grass, the son of Rite Aid’s founder, faced criticism for making allegedly improper personal deals with Rite Aid as well as failing to integrate Rite Aid’s spiraling acquisitions, including its largest undertaking, the $2.4-billion addition of Thrifty Payless.
In a filing with the Securities and Exchange Commission on Nov. 18, Rite Aid said KPMG resigned as its outside auditor because it could no longer rely on representations made by management. The SEC has launched a formal investigation.
“We are committed to ensuring the absolute integrity of Rite Aid’s financial information,” Green said. “We are making a concentrated effort to strengthen our financial controls and discipline, and we are confident that the company’s financial statements going forward will reflect the highest standards of accuracy.”
As part of Deloitte & Touche’s agreement to become Rite Aid’s auditor, Rite Aid has hired New York law firm Swidler Berlin Shereff Friedman to investigate certain financial matters at the company. Deloitte & Touche will not issue any reports until the law firm’s investigation is complete.
In other management changes expected to be announced today, Rite Aid will make David Jessick, 46, who has 20 years of drugstore industry experience, its new chief administrative officer. Most recently, Jessick served as executive vice president of finance and investor relations for Fred Meyer Inc.
John Standley, 36, a former chief financial officer at Ralphs grocery chain, will be named chief financial officer.
Miller has strong background in the grocery industry, having joined Kroger in May when the company acquired food and drug retailer Fred Meyer, where he was CEO. Miller also served in a number of senior positions while at Albertson’s, a retail food and drug chain that operates almost 2,500 stores and recently acquired Lucky Stores.
On Sunday, Miller said he was confident that his team would get Rite Aid back on track, saying Rite Aid has a powerful brand name, 85,000 dedicated employees, one of the most modern store bases in the industry and state-of-the-art pharmacy technology.
Miller said his team is committed to the sale or partial sale of PCS Health Systems, one of the country’s largest prescription-drug benefits management companies, which Rite Aid bought for a hefty $1.5 billion earlier this year.
Rite Aid was this year’s worst-performing company in the benchmark Standard & Poor’s 500 index, with an 85% decline in value.
Rite Aid’s stock closed Friday at $8.25 a share on the New York Stock Exchange--far off its January high of $51.13 a share.
In September, the company said it would sell 38 of its underperforming stores to Longs Drug Stores. Rite Aid still operates about 608 stores in California.
