Walgreens to Close 1,200 Stores

Walgreens announced on Tuesday that it will close 1,200 stores over the next three years, starting with 500 locations in 2025. The pharmacy chain is hoping to cut costs by about $1 billion, and that means closing stores that are not profitable. According to a report by The New York Post, they settled on the 1,200 stores figure on Tuesday with the help of analysts.

Walgreens announced that major store closures were coming back in June, but the details had not been worked out at the time. However, even then Walgreens estimated that about 25 percent of their total stores were unprofitable, and they repeated that figure on Tuesday. The company has about 8,700 total locations around the U.S., so that means over 2,000 stores are unprofitable. The closures come after other cost-cutting measures – notably, cutbacks to the corporate personnel.

Walgreens and its business analysts blame consumer trends for its recent drop in profits. The company has reportedly been hit by high inflation prices in recent years, which contributed to slower spending among its usual customers. Additionally, drug reimbursement rates are reportedly low, meaning that pharmacies are paid less for dispensing prescription medications.

Last year, Tim Wentworth took over as Walgreens’ new CEO, and he set out to cut costs by a staggering $1 billion. He already made a dent by removing multiple mid-level executive roles from the company, but now the cutbacks will begin to impact retail employees and the communities they serve.

“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 on Tuesday.

So far, the announcement has had the biggest impact on Walgreens’ stock prices. The company has been trading at some of the lowest prices in three decades recently, and was down by 65 percent this year. It is the worst-performing stock on the S&P 500 index. However, on Tuesday Walgreens share prices rose by over 4 percent in pre-market trading, showing that investors are confident in Wentworth’s plan.

Walgreens was able to outpace its projected earnings for the last fiscal quarter, and is on pace to keep up with its next round as well. For now, the company has not announced which stores will be closing or when.