Walgreens to close ‘significant’ number of stores as profits fall (2024)

Walgreens will close a “significant portion” of its 8,600 U.S. locations over the next three years as it struggles to keep up with a rapidly evolving retail pharmacy industry, the company announced Thursday.

“We are at a point where the current pharmacy model is not sustainable and the challenges in our operating environment require we approach the market differently,” Walgreens chief executive Timothy Wentworth said during the company’s quarterly earnings call. “We do not expect an improvement in the U.S. retail environment.”

The pharmacy giant, based in Deerfield, Ill., said 25% of its stores are underperforming and will be considered for closure. The majority of employees will be moved to other stores, Wentworth said.

While the company did not identify specific locations for closure, the scope of the move could put more Americans at risk of living in pharmacy deserts. Walgreens has 127 stores in Michigan.

Over the last two years, the nation’s largest pharmacy chains have been closing stores. Walgreens, which has closed 2,000 locations over the past 10 years, has shuttered 484 stores in the United States since February. Rite Aid, which filed for bankruptcy last year, has closed more than 500 stores.

Earlier this month, Rite Aid said it was closing 12 of its 186 Michigan locations, and workers at some stores in the state have reported being told that the chain would close all of its Michigan pharmacies. Rite Aid also is closing its distribution center in Waterford Township and laying off 191 workers in mid-August.

CVS has closed about 300 stores this year after announcing in 2021 that it would shutter 900 stores across three years.

Pharmacies can be lifelines in rural or low-income areas, particularly in food deserts — areas that have limited access to healthy and affordable food. Pharmacists are often the most accessible health-care professional for these communities.

In addition to drugs and other health-care items, retail pharmacy chains rely on sales of food and other goods. But consumers have been shying away from discretionary purchases over the past year.

Wentworth, echoing what some other retail businesses have said this year, described inflation-weary customers as “increasingly selective and price-sensitive in their purchases.”

Retail sales for Walgreens fell 4% in the most recent quarter compared with the same period last year. Overall revenue, including its British pharmacy chain Boots, increased 2.6%. While it’s a modest increase, it represents a loss of market share to competitors that grew faster, said Neil Saunders, managing director of GlobalData.

“Walgreens has been losing front-of-store customers for a while now, and this long-established trend has been exacerbated by the cost-of-living crisis, which has seen customers curtailing the volume of products they buy and shopping around more for the best deals and bargains,” Saunders said.

Walgreens’s uncompetitive pricing has been an obstacle for the chain, he added.

Wentworth said the company is investing in targeted promotions and price cuts, “but they weigh on near-term profitability as we refine our approach.”

Walgreens, which lowered its profit forecast for the year, plans to shake up its store assortment, back away from its primary-care business and build out its loyalty rewards program.

The company plans to expand its private label and shave down its brand offerings to just those that “are helping us win,” Wentworth said. In the last quarter, the chain removed eight national brands from its health and wellness categories, replacing them with Walgreens-branded items. The company will also lean into same-day delivery.

Walgreens’s stock price had plunged 25% by midday Thursday.

Retrenchment has been a long time coming in national pharmacy chains, retail analysts say. A comedown from pandemic-era sales of coronavirus vaccines, at-home test kits and other products has hurt profits. The industry also has suffered from increased competition, changing consumer behaviors, retail crime, staffing shortages and underinvestment in stores.

At the same time, chains are seeing dwindling margins on medications, largely because of pharmacy benefit managers, which negotiate with insurers, pharmacies and drugmakers over coverage of certain prescriptions, the price of prescriptions and pharmacies’ reimbursem*nt rates.

Meanwhile, pharmacy workers at the nation’s largest chains have been outspoken about working conditions, with employees at Walgreens and CVS staging multiple walkouts over the past year. A dozen workers have told the Washington Post that circ*mstances worsened during the pandemic, and the pharmacy staffers said they saw standards decline over the past two years as they were told to do more with less.

Store closures have compounded the workload issue, pharmacy workers said, because remaining stores are flooded with more prescriptions, while rarely getting additional staff to help with the workload.

Wentworth said Walgreens has been working with deans of pharmacy and trade associations on recruiting pharmacists and finding ways to “reinvigorate the community pharmacy labor supply chain.” He added that the company will build out its pharmacy services, such as immunizations, to lure in more patients.

Hannah Ziegler contributed to this report.

Walgreens to close ‘significant’ number of stores as profits fall (2024)

FAQs

Why is Walgreens closing locations? ›

Walgreens is closing up to a quarter of its 8,600 stores within the United States. Walgreens CEO Tim Wentworth recently explained to the Wall Street Journal on June 27 that the closures would focus on locations that aren't profitable, too close to each other or stores struggling with theft.

Why is Walgreens dropping? ›

Walgreens and other retail pharmacies have suffered in recent years from smaller revenue from prescription drugs and staffing shortages, amid competition with Amazon's online pharmacy business. Walgreens' share price has also fallen since announcing a controlling stake in VillageMD worth $5.2 billion in 2021.

What is an interesting fact about Walgreens? ›

Walgreens became the first major drug chain to put its prescriptions into child-resistant containers, long before it was required by law. Charles Walgreen III became the company's president. Walgreens reached $1 billion in sales.

How many Walgreens are there in the US? ›

To turn things around, Walgreens last week disclosed it was finalizing a “footprint optimization program” to close certain underperforming stores of the company's more than 8,600 U.S. locations.

Who owns Walgreens? ›

(WBA) is an American multinational holding company headquartered in Deerfield, Illinois, which owns the retail pharmacy chains Walgreens in the US and Boots in the UK, as well as several pharmaceutical manufacturing and distribution companies.

How many CVS stores are there in the US? ›

CVS Health key facts

CVS Health has increased its number of stores in the last decade from 5,474 stores in 2005 to 9674 stores at the end of 2022. The. Almost 40 percent of the company's revenue are generated from its pharmacy services while the rest is generated from its retail/LTC segment.

What is the future of Walgreens? ›

Expect a leaner, smaller footprint

One of the things that's likely to happen over the next decade is that Walgreens becomes smaller in size. The company has a lot of physical store locations, but that means a higher level of staffing needs and resources. It also comes with more costs and challenges.

What is the outlook for Walgreens? ›

Based on analyst ratings, Walgreens Boots Alliance's 12-month average price target is $13.73. Walgreens Boots Alliance has 23.69% upside potential, based on the analysts' average price target. Walgreens Boots Alliance has a consensus rating of Hold which is based on 2 buy ratings, 7 hold ratings and 3 sell ratings.

What is Walgreens new name? ›

One of the country's largest specialty and home delivery pharmacies became AllianceRx Walgreens Pharmacy as Walgreens' full ownership of the company, announced in January, necessitated the name change from AllianceRx Walgreens Prime.

Who is the largest shareholder of Walgreens? ›

Please be aware that if you have received a link to this article in an email, text or by any other means, it is likely a scam. Stefano Pessina (born 4 June 1941) is an Italian-Monegasque billionaire businessman; he is the executive chairman and largest single shareholder of Walgreens Boots Alliance.

What did Walgreens used to be called? ›

Name. The company was founded as the Walgreen Drug Co., and did business under that name from 1901 to 1931. It was known as Walgreen Drug Stores from 1931 to 1948, and Walgreen's from 1948 to 1955. In 1955 the apostrophe was dropped from the name on retail outlets, which began using the "Walgreens" name.

How profitable is Walgreens? ›

Walgreens booked sales of $36.4 billion for the quarter, up 2.6% from the same period a year ago. The company reported net income of $344 million, or 40 cents per share, for the quarter. That compares with net income of $118 million, or 14 cents per share, for the same period a year ago.

Is CVS bigger than Walgreens? ›

CVS: Convenience. Both Walgreens and CVS are the largest retail pharmacies in the U.S. CVS is the largest, with close to 25% of market share based on prescription drug revenue.

What state has the most Walgreens stores? ›

As of May, 2024, there are 8250 Walgreens pharmacies in the United States. These pharmacies are located in 53 states and territories and 3251 cities. The state with the most Walgreens locations is Florida, with 769 pharmacies. This is about 9% of all Walgreens locations in the United States.

Is Walgreens owned by Walmart? ›

Does Walmart own Walgreen's stores? No, Walmart does not have any relationship with Walgreens. Sam's Club and Walmart are connected to the same people, and were started by Sam Walton. Walgreen's is a separate company.

What is the controversy with Walgreens? ›

Walgreens is coming under an increasing amount of scrutiny after it confirmed last week it won't sell the abortion drug mifepristone in states where Republican attorneys general told the pharmacy not to—even if abortion is still legal there—as Democrats have called to boycott the company while it also faces potential ...

Did Walmart buy out Walgreens? ›

Are CVS and Walgreens owned by Walmart? Each of these pharmacy chains operates as a separate and independent company with its own ownership and management. Walgreens: Walgreens is owned by Walgreens Boots Alliance, Inc., which is a publicly traded company. It's one of the largest pharmacy chains in the United States.

Why is Walgreens moving out of California? ›

The measure allows ordinary citizens to file lawsuits over illegal guns. California Gov. Gavin Newsom (D) is officially pulling back the renewal of a $54 million state contract with Walgreens, after the retail pharmacy giant said it would stop providing abortion pills in 21 states.

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