Walgreens has announced plans to close approximately 1,200 locations over the next few years.
This decision comes as the company faces declining consumer spending and increased competition from online retailers like Amazon. With these closures, about 13% of Walgreens' more than 8,700 stores will be affected.
Walgreens Unveils Plan to Close Stores
In a recent earnings report, Walgreens revealed its strategy to close around 500 stores in fiscal year 2025, which is just the beginning of a larger effort to reduce costs. CEO Tim Wentworth, who took charge last year, emphasized the company's commitment to focusing on its core business of retail pharmacy, said USA Today.
While the specific locations of the stores set for closure have not yet been announced, some stores close to each other or those experiencing high theft rates may be targeted.
Despite these closures, Walgreens reported some positive news in its latest financial report. The retail pharmacy sector experienced a rise in sales, reaching $29.5 billion, which is a 6.5% increase compared to the same period last year.
Additionally, the chain had previously surpassed its goal of cutting $1 billion in expenses during the last fiscal year. However, it still faced a significant challenge with a staggering $3 billion loss in the last quarter.
The news of store closures arrives during fiscal year 2024, a year that has shown signs of improvement but continues to be difficult for the company. While Walgreens saw a revenue increase of over 6% compared to the previous year, it faces ongoing challenges.
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Walgreens Faces Profitability Struggles
The rising costs of prescription fulfillment and competition from online retailers have made it harder for Walgreens and other pharmacy chains to maintain profitability.
Walgreens isn't alone in facing these challenges. Other pharmacy chains like CVS have also had to make tough decisions. CVS announced it had to lay off thousands of employees due to ongoing difficulties in the market.
Meanwhile, Rite Aid has struggled for years and has recently closed hundreds of locations after filing for bankruptcy last year. The retail industry has seen a wave of closures and bankruptcies recently.
Many retailers have been affected by rising prices and a general decrease in consumer spending. For instance, True Value, a hardware wholesaler, filed for bankruptcy this week. Other notable retailers like LL Flooring, Red Lobster, and Bed Bath & Beyond have also closed numerous locations as they grapple with the financial impacts of the COVID-19 pandemic.
Even well-known brands like Hooters, Sears, Kmart, and J.C. Penney have shut down stores across the country since 2020. Recently, furniture store Conn's declared bankruptcy and announced plans to close all its stores, while Buca di Beppo, an Italian restaurant chain, entered Chapter 11 bankruptcy proceedings in August, according to Austin American-Statesman.
