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Standley to become Rite Aid's chief executive; Sammons to remain chairman
January 21st, 2010
CAMP HILL, Pa. – Rite Aid Corp. this summer plans to promote president and chief operating officer John Standley to chief executive officer.
The drug store chain said Thursday that Standley, 46, will become CEO effective June 24 at the company's annual stockholder meeting, and current CEO Mary Sammons, 63, will continue as chairman.
According to Rite Aid, Standley's promotion is part of the company's executive succession plan and was approved Thursday at a regularly scheduled meeting of the board of directors.
Plans call for Sammons to remain Rite Aid chairman until the company's annual meeting in June 2012. According to the retailer, Sammons said she aims to be an active chairman, continuing to represent the company in industry and government affairs plus assist as needed with strategic initiatives.
Sammons has served as Rite Aid's CEO since 2003 and as chairman since 2007. She joined Rite Aid in December 1999 as president and COO. Before coming to the company, she was president and CEO of Fred Meyer Stores, a food, drug and general merchandise retail unit of Fred Meyer Inc., which was acquired by Kroger Co. in 1999.
She has served on Rite Aid’s board since joining the company and is president of the Rite Aid Foundation and a member of the executive committee of the National Association of Chain Drug Stores.
"When I asked John to return to Rite Aid, I knew he would move swiftly to improve our company's operations," Sammons said in a statement from Rite Aid. "As president and COO, he's helped us manage through this recession and set in motion initiatives to grow our company for the future. We are in a much stronger financial position today in large part due to his leadership. His many accomplishments in such a short time as president and COO and his previous successful track record at our company demonstrate his ability to guide Rite Aid as its next CEO."
A food and drug retailing veteran, Standley returned to Rite Aid in September 2008 as president and COO after leaving in August 2005 to become CEO and a board director at Pathmark Stores Inc. He had originally joined Rite Aid in December 1999 as executive vice president and chief financial officer as part of a new executive management team that also included Sammons, the company said. He has served as a Rite Aid board member since last June.
"It's a privilege to work with Mary and the 99,000 talented and dedicated Rite Aid associates to build on the considerable progress we've made in the past year," Standley said in a statement. "While we still have a lot of hard work ahead, I'm confident in the strategies we've identified to improve our performance and look forward to leading the company as we continue to implement initiatives to grow profitable sales, further improve our cost structure and reduce debt."
Rite Aid has continued to struggle as the lingering economic downturn and intensified competition from rivals CVS Caremark Corp. and Walgreen Co. have made it more difficult for the company to integrate the 1,800 Brooks Eckerd stores it acquired from Jean Coutu Group in 2007 and get those stores' performance up to speed.
In its most recently completed quarter, its fiscal 2010 third quarter, Rite Aid beat Wall Street analyst estimates with a smaller loss but continued to experience declined sales. Management also forecast a loss for fiscal 2010, although executives narrowed their guidance by reducing the high end of the projected loss while raising the low end of the estimated earnings range.
And earlier this month, Rite Aid reported that December same-store sales fell 1.8%, which marked its seventh straight month of same-store sales decreases. The retailer's last same-store sales gain came in May, when it reported a 0.6% increase.
Rite Aid also has closed a number of stores. The chain operated 4,801 stores as of the close of its third quarter on November 28, down from 4,914 at the end of the prior-year period.
However, Rite Aid executives and industry analysts note that the company has made big strides in bolstering liquidity and reducing its debt load, cutting costs and sharpening efficiencies, putting itself in a better position to get back on the growth path once the consumer spending environment improves.
For example, in reporting third-quarter results, Rite Aid said its liquidity remained strong, with $903.2 million of availability, and that it has no major debt maturities until September 2012.
"Rite Aid has taken significant steps in improving its liquidity position, successfully refinancing all of the debt maturities due in September 2010, which removed considerable uncertainty around the company's ability to refinance upcoming debt maturities," Deutsche Bank Securities analyst Bill Dreher wrote in a research note on Rite Aid's third quarter. "Rite Aid has also taken steps to reduce costs, which should enable better operating margin improvement once the consumer spending environment and comps recover."
Standley is no stranger to reinvigorating a retailer. Rite Aid said that from 2005 until 2007, he engineered and led a turnaround at Pathmark, at the time a $4 billion regional supermarket chain with a strong pharmacy business. The chain was acquired by A&P in December 2007.
And Standley has a solid financial background in food and drug retailing. While at Rite Aid from 1999 and 2005, he served as chief administrative officer, senior executive vice president and CFO. Before that, he served in key executive financial positions at various retail and grocery companies, including wholesaler Fleming Inc. and retailers Fred Meyer Inc., Ralphs Grocery and Smith Food & Drug Centers.