Like so many retail chains, Walgreens has struggled amid failed growth strategies, rising competition, and mass shrinking. (However, in Jan. 2023, Walgreens admitted it “cried too much” over shoplifting.) Still, company CEO Tim Wentworth revealed in a Wall Street Journal interview that Walgreens operates 8,600 stores in the U.S., 25 percent of which aren’t profitable. Looking ahead, Walgreens is setting plans into motion that will hopefully restore business and boost profit margins. “We are at a point where the current pharmacy model is not sustainable,” Wentworth told analysts last quarter. All of this to say, your neighborhood Walgreens may be closing its doors—if it hasn’t already.
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During a fourth-quarter earnings call on Tuesday, Walgreens announced plans to close 1,200 of its locations across the U.S. In a press release, the company explained the “footprint optimization program” will unfold over the course of three years. However, approximately 500 stores will shut their lights in 2025.
“Our retail pharmacy business is central to our go-forward business strategy. However, increased regulatory and reimbursement pressures are weighing on our ability to cover the costs associated with rent, staffing, and supply needs,” a company spokesperson said in a statement to Best Life.
“It is never an easy decision to close a store. We know that our stores are important to the communities that we serve, and therefore do everything possible to improve the store performance. When closures are necessary, we will work in partnership with community stakeholders to minimize customer disruptions,” the spokesperson continued.
As for which cities and states will be impacted by the store closures, the spokesperson said specific locations and details aren’t available at this time. However, Walgreens is committed to “redeploy the majority of our team members from those stores that we close.”
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In a call with analysts, Walgreens’ global chief financial officer, Manmohan Mahajan, hinted that the company would strictly target locations with negative cash flow, as well as underperforming stores where the company owns the locations and stores whose leases are set to expire in the next few years.
"This indicates that there are another 800 stores for which we're focused on improving their operating performance and cash flows," Mahajan said. "However, as has always been the case, we will continuously evaluate this group and all our stores to ensure we ultimately operate with the best possible footprint."
Walgreens reported a $3 billion net loss during the fourth quarter of fiscal 2024, per the company press release. Meanwhile, operating loss in fiscal 2024 was 104.5 percent higher than the year prior, coming in at $14.1 billion. An increase of 180.4 percent was also attributed to the company’s net loss in fiscal 2024, while adjusted net earnings were down by billions.
