Walgreens Is Now Planning to Close 450 Locations
The drugstore chain is preparing to pare down despite increased sales.
Store closures have certainly subsided since the height of the COVID pandemic, but the retail apocalypse is far from over. Major companies like Sears are on the precipice, closing their last stores in several states, while big names like Bed Bath & Beyond are going out of business. But even if they're not shutting down entirely, many retailers are still significantly paring down their physical presence. Now, Walgreens has announced plans to close 450 locations, despite increased sales. Read on to learn more about the drugstore chain's new plans.
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Walgreens is seeing increased sales at its stores.
On June 27, Walgreens Boots Alliance reported its third-quarter earnings for the 2023 fiscal year—and at first glance, things look pretty good.
According to the report, the retailer's third-quarter sales reached $35.4 billion this year, which is an increase of 8.6 percent from the year prior. Looking at the fiscal year overall, Walgreens' sales in the first nine months increased by 3.4 percent from the same period in the last fiscal year, reaching $103.7 billion in total.
The company's U.S. retail and pharmacy sectors have been doing particularly well. Nationwide, comparable pharmacy sales increased 9.8 percent compared to the third quarter in fiscal year 2022, and comparable retail sales went up by 0.2 percent, "led by strong results in the grocery & household and beauty categories," Walgreens Boots Alliance said in its report.
But it's not all good news for Walgreens.
Consumers have become more "cautious."
Despite the increase in sales, Walgreens fell short of its estimates for the third quarter of fiscal year 2023. The company also cut its full-year earnings outlook, "reflecting challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes."
As a result, Walgreens' shares fell by 9 percent to $28.64—which is the lowest they've been in more than 11 years, Reuters reported.
"Consumers continue to appreciate the value, convenience, and range of services provided by Walgreens and Boots. However, significantly lower demand for COVID-related services, a more cautious and value-driven consumer, and a recently weaker respiratory season created margin pressures in the quarter," Walgreens CEO Rosalind Brewer said in a statement accompanying the company's June 27 press release. "Our revised guidance takes an appropriately cautious forward view in light of consumer spending uncertainty, while still demonstrating clear drivers of a return to operating growth next fiscal year."
The drugstore chain is planning to close 450 stores as a result.
With uncertainty brewing and a less rosy financial outlook, Walgreens has decided to make some serious cuts. The retailer has already been busy closing locations over the past year, but on a June 27 earnings call with investors, CFO James Kehoe revealed that Walgreens is planning to close another 450 stores.
"We will continue to optimize our locations and opening hours, and expect to close an additional 300 locations in the U.K. and 150 locations in the U.S.," Kehoe said during the call.
Best Life reached out to Walgreens about the upcoming closures, and we will update this story with their response.
These Walgreens locations will shutter by the end of next August.
Walgreens has not shared much more information about these closures—like exactly which stores will be affected, or when the closures will begin.
But a spokesperson for the company told CNN that the retailer plans to close the 150 U.S. locations by the end of its next fiscal year, which falls on Aug. 31, 2024. There are currently around 9,000 Walgreens stores in the U.S., per CNN.
"As you have seen, we are accelerating our portfolio optimization to further simplify the business," Kehoe said.