Dealing with mounting losses, the Deerfield, In poor health.-based Walgreens, on Oct. 15 introduced the deliberate shuttering of about 1,200 areas nationwide, over the course of the following three years. As CNN’s Jordan Vallinsky wrote on Tuesday, “Walgreens is closing roughly 1,200 areas because the drug retailer chain struggles to take care of on-line rivals and declining prescription drug funds. By 2027, about one in seven Walgreens at present open will shut its doorways. About 500 Walgreens will shut its doorways over the following 12 months, the drug retailer chain introduced Tuesday.”
Vallinsky famous that “These closures characterize a major escalation from a couple of months in the past, when the financially struggling firm introduced in June it was shutting 300 underperforming areas as a part of a multi-year optimization program beneath CEO Tim Wentworth. On the time, the corporate had mentioned a few quarter of Walgreens shops had been unprofitable, and the chain promised ‘imminent’ adjustments.”
And the Washington Publish’s Aaron Gregg reported, additionally on Tuesday, that these 1,200 areas characterize “about 9.5 % of the pharmacy chain’s 12,500 areas worldwide, although it wasn’t instantly clear what share of U.S. shops would shut. Executives had thought of shuttering much more websites — the corporate in June mentioned 25 % of its retail areas had been underperforming, making them candidates for closure. The primary 500 closures will happen over the following 12 months,” he wrote. “Chief government Tim Wentworth mentioned the corporate will deal with ‘stabilizing’ its retail pharmacy enterprise. ‘This turnaround will take time, however we’re assured it’ll yield vital monetary and shopper advantages over the long run,’ Wentworth mentioned. The shop closures — which Walgreens referred to as an ‘accretive footprint optimization program’—had been introduced as a part of the pharmacy chain’s quarterly earnings report Tuesday.”
And he added that “Walgreens reported a internet lack of $8.6 billion for the fiscal 12 months ending Aug. 31 on general gross sales of $147.7 billion. The corporate’s pharmacy gross sales within the fourth quarter elevated 9.6 % year-over-year, however retail gross sales decreased 3.5 %.”
Gregg additionally quoted GlobalData analyst Neil Saunders, who mentioned that the shop closures are “emblematic of an organization that’s in bother and attempting to course appropriate,” noting that it spent years constructing its enterprise by way of acquisitions whereas neglecting retail fundamentals like customer support. The corporate is left with a number of shops that aren’t producing a return on funding, Saunders instructed him.
What’s extra, one other 800 shops may very well be on the chopping block sooner or later, reported Anjalee Khemlani of yahoo!finance, on Tuesday. Khemlani famous that “The quantity had not been beforehand introduced, however Walgreens indicated as much as 2,000 retailer closures coming throughout an earnings name in June. Walgreens inventory jumped greater than 12 % in buying and selling Tuesday on the information — signaling the transfer was no shock, and even welcome, to traders,” she wrote. “The corporate introduced fiscal fourth quarter earnings in step with expectations, with a loss per share of $3.48 in comparison with $0.21 in the identical quarter in 2024. Revenues, in the meantime, elevated 6 % 12 months over 12 months to $37.5 billion.”
And, Khemlani wrote, “Mary Langowski, president of US healthcare on the firm, mentioned the strikes made to this point have centered on near-term shareholder worth. For fiscal 12 months 2025, the corporate will deal with the expansion of core traces of enterprise, together with the pharmacies and specialty pharmacy providers.”
And a reporter from the Related Press wrote on Tuesday in a non-bylined report revealed in U.S. Information, that “Drugstores that after snapped up prime retail area in cities and cities throughout the nation are in retreat. They’ve been battered by shrinking prescription reimbursement, persistent theft, rising prices and shoppers who’ve strayed to on-line retailers or rivals with higher costs. The increase they obtained from taking the lead on vaccinations through the COVID-19 pandemic has lengthy since pale.”
That report went on to state that “Walgreens’ announcement Tuesday morning comes as rival CVS Well being wraps up a three-year plan to shut 900 shops and Ceremony Assist emerges from chapter, whittled right down to about 1,300 areas. As the businesses retract, they elevate issues in lots of communities about entry to well being care and prescriptions. Drugstore leaders and analysts who comply with the business say smaller variations of those chains have a future in U.S. retail, however they’re nonetheless attempting to know how that can play out.”
