Walgreens, one of the largest pharmacy chains in the U.S., is set to close a significant number of its stores over the next three years.
As reported by Breitbart, the decision comes as the company struggles to address major financial losses and an economy that just isn’t cutting it. The closures are part of a larger strategy aimed at stabilizing operations and trimming down expenses, spearheaded by new CEO Tim Wentworth.
The drugstore giant plans to shut down around 1,200 locations, with roughly 500 of these closures happening as early as fiscal year 2025, according to reports from the Associated Press (AP).
Walgreens has put chains on freezers in a San Francisco pharmacy location to deter theft, the company confirmed this week. https://t.co/eTL18nMpJn
— Breitbart News (@BreitbartNews) July 20, 2023
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This move is expected to improve Walgreens’ earnings and free cash flow immediately. However, Walgreens has yet to disclose which specific locations will be impacted.
The market reacted positively to this news, with the company’s stock jumping 5.4% to $9.50 in premarket trading. Michael Cherny, an analyst with Leerink Partners, commented on the forecast, stating that it was “better than the worst-case scenario.”
Despite the positive outlook, Cherny also noted that Walgreens still faces significant macroeconomic challenges that won’t disappear overnight.
Under Wentworth’s leadership, Walgreens has been working hard to right the ship. Since taking over as CEO in October 2023, he has initiated a $1 billion cost-cutting program, let go of several mid-level executives, and implemented other cost-saving measures.
“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.
Walgreens’ stock performance has been dismal, hitting near 30-year lows and down 65% for the year, making it the worst performer on the S&P 500. But the new CEO’s approach appears to be providing some hope, at least for the moment.
The company, headquartered in Deerfield, Illinois, operates over 8,000 stores across the U.S., and the store closures are intended to help them regain stability in a tough market.
In its fiscal fourth-quarter report, Walgreens announced revenue of $37.55 billion, a 6% increase compared to the same period last year, exceeding Wall Street’s expectations of $35.75 billion. However, the company still reported a staggering $3 billion quarterly loss, or $3.48 per share, as reported by Fox Business.
Despite these losses, Wentworth remains optimistic. His plan for fiscal 2025 focuses on stabilizing the retail pharmacy by optimizing store locations, controlling operational costs, improving cash flow, and addressing reimbursement models to better support margins while ensuring patient access.
Walgreens’ restructuring efforts are in full swing, with the hope that these changes will help the pharmacy giant regain its footing in the marketplace.
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