Walgreens will close 1,200 stores over the next three years to address declining U.S. retail performance, following a $3 billion quarterly loss. Despite this, the company reports better-than-expected earnings and plans to focus on its profitable stores while investing in core pharmacy services.
Key Findings
Walgreens plans to close 1,200 stores in the U.S. over three years.
The closures come after a $3 billion quarterly loss and include 500 closures in the current fiscal year.
The company will focus on closing underperforming stores, particularly those with expiring leases.
Despite the closures, about 6,000 stores are profitable and will receive more investment.
Walgreens is shifting focus to improve core pharmacy services and digital channels to meet changing consumer needs.
How It Works
Walgreens' store closures are part of a broader cost-cutting and turnaround strategy. This includes:
Reducing the number of underperforming stores.
Focusing on improving the customer experience at profitable locations.
Exploring the sale of its VillageMD clinic business as part of a restructuring effort.
Increasing investment in digital offerings and loyalty programs to attract more patients.
Why This Matters
For healthcare providers, Walgreens' focus on a more efficient and customer-centric pharmacy model is significant. The company's shift toward improving digital services, pharmacy services like immunizations, and adjusting its store network to adapt to economic pressures could change how patients access medications and pharmacy care.
Beyond the Headline
While Walgreens is closing a substantial number of stores, the company still sees potential in the pharmacy-led model. With around 6,000 profitable locations, they are doubling down on these sites by enhancing pharmacy services and expanding their role in healthcare, particularly with an emphasis on women's health and wellness products.
Also, the store closures at Walgreens are indicative of broader trends in the pharmacy industry, where chains like CVS and Rite Aid are also reducing their physical footprints. Challenges such as low prescription reimbursement rates, rising operational costs, and increased competition from online retailers are pushing brick-and-mortar pharmacies to adapt or downsize.
