Walgreens to Shutter 600 Stores as Part of $4.38B Rite Aid Acquisition
DEERFIELD, ILL. — Walgreens Boots Alliance Inc. (NASDAQ: WBA), a global pharmacy-led enterprise comprising brands such as Walgreens and Duane Reade, plans to shutter 600 of its stores as part of its $4.38 billion purchase of rival Rite Aid Corp.
During a conference call on Wednesday, Oct. 25, Walgreens spokesman Michael Polzin said the 600 shuttered stores will mostly be Rite Aid locations within close proximity to existing Walgreens stores as the company looks to optimize its retail store footprint.
On Sept. 19, Walgreens announced it had secured regulatory clearance for its acquisition of 1,932 stores, three distribution centers and related inventory from Rite Aid.
According to Walgreens’ earnings report released yesterday, the first few Rite Aid stores were acquired in the past week. Walgreens plans to transfer ownership of the remaining stores in phases as it aims to complete the store transfers by spring 2018.
Walgreens has reviewed its combined U.S. store portfolio to determine the affected stores. The company expects to start closings between spring 2018 and mid-2019. As a result of the store closures, Walgreens expects to realize $300 million in annual savings through Aug. 31, 2020. The savings will be derived primarily from procurement, cost savings and other operational matters, according to the earnings release.
Walgreens hasn’t announced which stores are closing. Going forward, the company plans to spend approximately $500 million of capital on store conversions and related activities for its entire retail real estate portfolio.
Deerfield-based Walgreens Boots Alliance and its related companies employ more than 385,000 people, as of Aug. 31. The company operates more than 13,200 stores in 11 countries and has more than 390 distribution centers in its network as well.
During fiscal year 2017, which ended on Aug. 31, Walgreens recorded $118.2 billion in sales, up 0.7 percent from fiscal year 2016. The company’s stock price closed on Wednesday, Oct. 25 at $69.58 per share, up slightly from $69.36 per share a year ago.
— John Nelson