WALGREENS has announced the mass closure of thousands of stores as the retailer’s CEO changes strategy.
Tim Wentworth, the CEO of Walgreens Boots Alliance, has revealed that the pharmacy chain would shut 1,200 stores over the next three years.
Walgreens CEO Tim Wentworth announced the retailer would shutter 1,200 stores[/caption]
Wentworth added he would be putting a $1 billion cost-cutting program in place[/caption]
The company also narrowly beat Wall Street’s lowered estimates for fourth-quarter adjusted profit, and forecast fiscal-year earnings that were mostly in-line with expectations, Reuters reported.
Wentworth added he plans to fire a number of mid-level executives and put in place a $1billion cost-cutting program.
“At first blush, (the forecast) looks better than worst-case scenario,” Leerink Partners analyst Michael Cherny said.
News of the closures means that by 2027 one in seven Walgreens will have shuttered.
Around 500 of the stores scheduled for the chop will shutters over the next year, although their locations have not yet been revealed.
“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.
The closures were announced in June but the company had not disclosed the number of affected stores at that time. It had over 8,000 stores in the United States as of August 31 last year.
In the fourth quarter of its fiscal year 2024, Walgreens said it recorded impairment charges on the goodwill of home care provider CareCentrix and equity investment in China.
The U.S Sun has reached out to Walgreens for comment.
‘WORSE THAN EXPECTED’
The CEO’s comments come after the retailer’s stock plummeted by more than 14% in the company’s financial results for the third quarter in June.
Walgreens has been forced to alter its outlook for profits for the year amid a “challenging” time for the pharmaceutical industry 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,” the CEO said in the report.
“Our results and outlook reflect these headwinds.”
FAILED PLANS
In a bid to compete with CVS, Walgreens increased its focus on primary care for patients.
Walgreens announced in October 2021 that it would spend $5.2 billion on primary care provider VillageMD to “remodel itself as a healthcare provider.”
This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term
Tim Wentworth
Part of the plan included introducing doctors’ offices to the drugstores.
But in February, Walgreens abruptly shuttered all of its VillageMD clinics in Florida.
Wentworth revealed that Walgreens was minimizing its stake in VillageMD and would no longer be the majority owner.
“We recognize where we are is a turnaround,” Wentworth said in a press release earlier this year.
“We recognize that we need to be focused on what are the parts of the business that we believe are contributing and have a future, and some of those need to change.”
