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 subsequent three years. As CNN’s Jordan Vallinsky wrote on Tuesday, “Walgreens is closing roughly 1,200 areas because the drug retailer chain struggles to cope with 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 subsequent 12 months, the drug retailer chain introduced Tuesday.”
Vallinsky famous that “These closures characterize a big escalation from a number 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 underneath CEO Tim Wentworth. On the time, the corporate had mentioned a couple of quarter of Walgreens shops had been unprofitable, and the chain promised ‘imminent’ modifications.”
And the Washington Publish’s Aaron Gregg reported, additionally on Tuesday, that these 1,200 areas characterize “about 9.5 p.c 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-about shuttering much more websites — the corporate in June mentioned 25 p.c of its retail areas had been underperforming, making them candidates for closure. The primary 500 closures will happen over the subsequent 12 months,” he wrote. “Chief govt Tim Wentworth mentioned the corporate will give attention to ‘stabilizing’ its retail pharmacy enterprise. ‘This turnaround will take time, however we’re assured it would yield important monetary and client advantages over the long run,’ Wentworth mentioned. The shop closures — which Walgreens known 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 web 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 p.c year-over-year, however retail gross sales decreased 3.5 p.c.”
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 means of acquisitions whereas neglecting retail fundamentals like customer support. The corporate is left with a whole lot of shops that aren’t producing a return on funding, Saunders informed him.
What’s extra, one other 800 shops might be on the chopping block in some unspecified time in the future, 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 p.c in buying and selling Tuesday on the information — signaling the transfer was no shock, and even welcome, to buyers,” she wrote. “The corporate introduced fiscal fourth quarter earnings in keeping 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 p.c 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 thus far have targeted on near-term shareholder worth. For fiscal 12 months 2025, the corporate will give attention to the expansion of core strains of enterprise, together with the pharmacies and specialty pharmacy companies.”
And a reporter from the Related Press wrote on Tuesday in a non-bylined report revealed in U.S. Information, that “Drugstores that when snapped up prime retail house 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 enhance 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 Help emerges from chapter, whittled right down to about 1,300 areas. As the businesses retract, they increase considerations 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 may play out.”
