Walgreens to close 1,200 stores as pharmacies struggle
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Walgreens Boots Alliance plans to close about 1,200 stores, representing roughly 10% of its locations worldwide.
Why it matters: CVS, Walgreens and Rite Aid long held a tight grip over prescription fulfillment, but they're losing their footing to a multitude of competitors, including mail-in options, online pharmacies and big-box stores.
Driving the news: Walgreens Boots Alliance — whose chains include Walgreens, Duane Read and the international Boots brand — said Tuesday that it will close the locations over the next three years.
- All of the closures will occur in the U.S., spokesperson Jim Cohn tells Axios, with about 500 occurring by about the end of August 2025. The company has about 12,500 locations in the U.S., Europe and Latin America.
- Cohn said the company has no information to share on which locations will close.
The big picture: CEO Tim Wentworth says he's trying to right the ship as the company continues to struggle with soft retail sales, labor crunches and low drug reimbursement rates.
- "This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term," Wentworth said in a statement.
Context: The company previously announced its plans to close a "significant" number of stores as part of a $1 billion cost cutting strategy.
- That raises concern about the potential creation of pharmacy deserts in certain communities.
By the numbers: Walgreens reported $37.6 billion in revenue in the fourth quarter, up 6% compared to the same quarter a year ago.
- But it also reported a loss of $3 billion, well above the $180 million loss it reported in the same quarter a year earlier.
Between the lines: Wentworth said Tuesday the company is in "active discussions" with pharmacy benefit managers and insurers to "ensure it is paid fairly for the value it provides."
- The company is also looking to partner directly with drug companies.
- The company took a $12.4 billion non-cash impairment charge in connection with VillageMD but said the primary care network has a "clearer path to profitability" after cost cuts.
State of play: Walgreens stock rose 4% in pre-market trading as investors welcomed the cost-cutting plan.
Yes, but: It was "another terrible quarter for Walgreens, and one which caps a fiscal year of problems and turmoil," GlobalData retail analyst Neil Saunders wrote Tuesday.
- "Walgreens spent years building its business through acquisitions and completely neglected the fundamentals of its stores and its retail operations."
