DEERFIELD, ILL. — Walgreens (NASDAQ: WBA) is set to close a significant portion of its store locations across the United States over the next three years. The company is finalizing its “footprint optimization program” after failing to meet earnings expectations in its fiscal third quarter, which ended May 31.
Walgreens CEO Tim Wentworth reported in the company’s earnings call on Thursday morning that 25 percent of stores in the United States were not profitable, and that “changes are imminent” for those locations. The retail pharmacy chain currently runs about 8,600 locations in the United States, meaning that as many as 2,150 underperforming stores face potential closure.
“We are finalizing a multifactor store footprint optimization program, which we expect will include the closure of a significant portion of these underperforming stores over the next three years,” said Wentworth. “Plans to finalize this number are in motion, and we will update you in due course.”
Even among the underperforming stores that will remain open, “we will contemplate additional closures if performance does not improve, which includes external factors, such as reimbursement rates,” said Wentworth. “While it is not an easy decision to close a store, we will work to minimize customer disruptions. And importantly, as we have done in the past, we intend to redeploy the vast majority of the workforce in those stores that we close.”
Walgreens was founded in 1901 and is headquartered in the Chicago suburb of Deerfield. According to the Associated Press, Walgreens has already closed 2,000 locations over the last 10 years. The company runs about 12,500 drugstores internationally.
Retail pharmacies face a slew of challenges, such as online prescriptions delivered by mail. As a result, chains across the segment have been closing stores. CVS, for example, announced in 2021 that it planned to close 900 stores over a three-year period starting in 2022.
“We are at a point where the current pharmacy model is not sustainable, and the challenges in our operating environment require we approach the market differently,” said Wentworth.
Walgreens Boots Alliance Inc. — the holding company that owns Walgreens in the United States and retail pharmacy chain Boots in the United Kingdom — also reported that it missed earnings expectations and cut its annual forecast, according to the Associated Press.
Following the earnings call, the company’s stock price plummeted to $12.19 per share by the end of the day on June 27, down from $15.66 on June 26 and $27.21 on the same day last year. As of June 28, the WBA stock price sits at $12.27 per share.
— Channing Hamilton