Walgreens is set to close roughly 1,200 stores nationwide as the pharmacy chain faces challenges from decreasing consumer spending.
The closures will happen over the next three years, with the first wave including 500 stores in fiscal year 2025, according to an earnings report released by Walgreens on Tuesday. In June, the company indicated to YSL News that it would close unprofitable locations but did not specify the number.
This strategy is part of a longer-term cost-cutting initiative led by CEO Tim Wentworth, who was appointed last year. Wentworth emphasized the company’s commitment to enhancing its core operations: retail pharmacy.
“This turnaround will require time, but we believe it will provide substantial financial and consumer benefits in the long run,” Wentworth stated.
Walgreens to reduce store count by 13% in the U.S.
While the specific locations affected by the closure have not been revealed yet, the decision will impact around 13% of the more than 8,700 stores open in the U.S. as of August 31 last year.
The announcement arrives during a year that shows signs of improvement, although challenges persist in fiscal year 2024.
Walgreens managed to exceed its goal of cutting $1 billion in expenses in the last fiscal year. However, the chain reported a $3 billion loss in the recent quarter, largely attributed to goodwill impairment charges related to the home care provider CareCentrix. Nevertheless, the company’s revenue grew by over 6% compared to the previous year, as stated in its earnings report.
In the retail pharmacy sector, fourth-quarter sales reached $29.5 billion, marking a 6.5% increase compared to the same period a year prior.
Drugstore chains face challenges with falling sales
The news of the store closures comes as Walgreens and other pharmacy chains contend with stiff competition from Amazon and reduced drug reimbursement rates from third-party payers for filling prescriptions.
CVS has reduced its workforce by thousands of corporate and other positions since 2023 while facing “ongoing disruptions, regulatory challenges, and changing customer demands,” according to a spokesperson who spoke with YSL News. After filing for bankruptcy about a year ago, Rite Aid has closed hundreds of locations across the U.S. due to difficulties competing with larger chains.
However, drug stores aren’t the only ones grappling with declining sales amid rising costs and a reduction in consumer spending.
Recently, hardware wholesaler True Value also filed for bankruptcy, joining others like LL Flooring, Red Lobster, Bed Bath & Beyond, and Big Lots, which have each shut down numerous stores following bankruptcy announcements this past July.
Many other retailers, including Hooters, Walgreens, Sears, Kmart, J.C. Penney, and even Disney Stores, have closed stores across the nation since 2020.
This story has been updated to correct a previous error.
