Walgreens is set to close many of its roughly 8,600 stores across the United States to breathe new life into its struggling business.
The company, which has not disclosed how many stores will be closed, revealed on Thursday that it plans to shut down several underperforming locations as part of a broader strategy to enhance its operations in the long run.
Walgreens CEO Announces Store Closures Amid Strategic Shift
In a recent call with analysts, Walgreens CEO Tim Wentworth announced significant operational changes within the company. He revealed that around a quarter of Walgreens stores are not making a profit and will likely close as part of a strategic review to rejuvenate the business.
Wentworth explained that the traditional pharmacy model is facing difficulties in today's challenging market, which requires a fresh approach to remain viable, CNN reported.
He highlighted that the forthcoming closures would primarily target stores that are either unprofitable, located too close to other Walgreens outlets or grappling with issues like theft.
Although detailed plans were not fully disclosed during the call with analysts, Wentworth mentioned that the store closures will occur over the next three years. The CEO of Walgreens hinted that more store closures could be on the table if the company's performance doesn't pick up.
In a recent interview with the Wall Street Journal, he reassured that most employees at the affected stores would be offered positions at other locations, highlighting the company's dedication to its workforce during these shifts.
Moreover, ahead of a crucial earnings call this Thursday, the U.S. Sun reported that Walgreens's CEO acknowledged the company is enduring a difficult phase within the pharmaceutical industry and a challenging U.S. consumer market.
These remarks set the stage for Walgreens to discuss its third-quarter financial results. Following an earnings report that did not meet expectations, the company's stock took a sharp dive, dropping over 14%. In reaction, Walgreens has adjusted its yearly profit forecasts downward, now setting them between $2.80 and $2.90 per share, a decrease from the initial projections of $3.20 to $3.35.
Additionally, as News Nation reported, major pharmacy chains like Walgreens, CVS, and Rite Aid are shutting stores due to low prescription reimbursements and operational costs.
Wentworth, who assumed leadership last fall, noted that customers are becoming more selective and price-conscious due to these pressures. Wentworth is deeply involved in a comprehensive review of the company, steering it through a period marked by significant industry challenges.
Walgreens CEO Outlines New Strategy Amid Financial Challenges
Despite the pharmaceutical sector's financial pressures, Walgreens has outperformed expectations with a strong showing in its healthcare division this quarter.
In a key meeting set for Thursday, Wentworth is expected to unveil his strategic vision to revitalize the company. Since taking the reins in October, he has initiated major changes, including a reshuffle of the senior executive team.
Earlier in the year, Walgreens, with its 123 years of history, conducted a strategic review to tackle ongoing financial difficulties.
Wentworth has stressed the importance of the retail pharmacy sector to the future of Walgreens, noting its vital role in improving the overall customer and patient experience. However, he has also recognized the need for change to keep the sector relevant.
Amidst these organizational shifts, Wentworth has provided assurances about Walgreens' global operations. According to the Wall Street Journal, he has confirmed that there are no current plans to sell off its international units, Boots or Shields Health Solutions, ensuring stability in the company's global strategy.
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