Leading Pharmacy Chain to Close 1,200 Stores as CEO Targets Cost Cuts Amid Shrinking Margins

Clear Facts

• Walgreens plans to close at least 1,200 stores over the next three years to cut costs and improve operations.
• About 500 stores are expected to close by fiscal year 2025 as part of this strategy.
• CEO Tim Wentworth cited a challenging operating environment and declining pharmacy margins as reasons for the closures.

Walgreens, one of the nation’s leading pharmacy chains, is set to shutter at least 1,200 stores over the next three years. This move is part of a strategic effort to reduce expenses and revitalize its operations under the guidance of new CEO Tim Wentworth.

The company has announced that approximately 500 of these closures will occur by fiscal year 2025. This decision comes in response to ongoing profitability challenges and shrinking margins.

In June, Walgreens revealed its plan to close a “significant” number of underperforming stores across the United States. However, at that time, Wentworth did not specify the number of stores that would be affected, only indicating that a “meaningful percent” of underperforming locations would be closed.

Wentworth highlighted the “difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins.”

In the latest earnings report, Wentworth remarked that the fiscal fourth-quarter and full-year results “reflected our disciplined execution on cost management.”

Walgreens reported a revenue of $37.55 billion for the fiscal fourth quarter, marking a 6% increase from the same period last year.

Despite the revenue growth, the company faced a net loss of $3 billion, or $3.48 per share, for the quarter. Nevertheless, shares of Walgreens Boost Alliance saw a rise of over 4% in premarket trading on Tuesday.

Looking ahead to fiscal 2025, Wentworth stated that Walgreens aims to focus “on stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow, and continuing to address reimbursement models to support dispensing margins and preserve patient access for the future.”

Let us know what you think, please share your thoughts in the comments below.

Source