Walgreens to Close Significant Number of Stores Amid Profit Plunge
Walgreens Boots Alliance CEO Tim Wentworth has announced a strategic overhaul that includes closing a "meaningful percent" of its 8,600 U.S. stores. The closures will target underperforming locations, particularly those that are not profitable, situated too close to one another, or facing high levels of theft. This move is part of a broader multiyear optimization program aimed at streamlining the company's operations and improving its financial performance.
In addition to the store closures, Walgreens plans to reduce its stake in the primary-care provider VillageMD, relinquishing its majority ownership. This strategic shift comes amid a challenging environment for the pharmacy industry and U.S. consumers. As a result, Walgreens has lowered its full-year adjusted profit outlook for fiscal 2024 to $2.80-to-$2.95 per share, down from a previous forecast of $3.20 per share. The company's shares dropped nearly 9% following the announcement, contributing to a 40% decline in its stock value for the year so far.
Despite these measures, Wentworth assured employees that the store closures are not expected to lead to significant job losses. The company also plans to launch a U.S. Retail Pharmacy action plan to enhance customer and patient experience and align its healthcare operations for better market capabilities. The retail pharmacy sector, including major chains like CVS and Rite Aid, has been facing declining profits from prescription sales and increased competition from online retailers like Amazon.
