Walgreens, one of America’s largest pharmacy chains, announced early Thursday plans to close numerous stores across the U.S. as it embarks on a “significant multiyear footprint optimization program to close certain underperforming” locations.
The company did not say exactly how many of its nearly 8,600 locations it plans to close.
Walgreens also adjusted its earnings expectations for the rest of 2024 amid “challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment.”
“We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins. Our results and outlook reflect these headwinds, despite solid performance in both our International and U.S. Healthcare segments,” said CEO Tim Wentworth. “Informed by our strategic review, we are focused on improving our core business: retail pharmacy, which is central to the future of healthcare. We are addressing critical issues with urgency and working to unlock opportunities for growth. Many of these actions will take time, but I am confident that we have the right team and the right strategy to lead a business turnaround for the Walgreens that our customers and patients need.
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For the three months ending May 31, Walgreens reported a 48% drop in operating income in the U.S. compared to the same timeframe in 2023. In the nine months leading to May 31, Walgreens had a 38% decline in operating income, compared to a year earlier.
Walgreens blamed the drop in income on “lower sale and leaseback gains, a challenging retail environment and reimbursement pressure, net of procurement savings, partly offset by cost savings initiatives.”
Walgreens’ top competitor CVS said in May that operating income from its stores was down 34% in the first three months of 2024 compared to 2023.
The announcement comes as large Midwest pharmacy chain Rite Aid announced it was closing locations in Ohio and Michigan while shuttering operations at a Michigan-based distribution center.