Yesterday, Walgreens Boots Alliance has announced plans to close 1,200 stores over the next three years, with 500 set to close by next year. The decision comes as the company faces challenges from lower drug reimbursement rates and a slowdown in consumer spending. CEO Tim Wentworth described the closures as part of a broader turnaround strategy during an earnings call.
The closures will affect around 14% of Walgreens’ U.S. locations, but the company aims to redeploy most of the impacted employees. Industry analyst Neil Saunders of GlobalData noted that the move reflects deep-seated issues within Walgreens, which he says has neglected its core retail operations in favor of acquisitions.
Despite these challenges, Walgreens reported better-than-expected fourth-quarter profits and set earnings expectations for 2025 that aligned with analysts’ forecasts. This news was well-received by Wall Street, as Walgreens’ shares surged by nearly 16%, closing at $10.42, although the stock remains down 60% for the year.
Since taking over as CEO last year, Wentworth has initiated several cost-cutting measures, including a $1 billion reduction program. In an effort to appeal to budget-conscious consumers, Walgreens cut prices on 1,300 products in May. The company also plans to retain nearly all prescription-filling business from the stores that are closing.
Last month, Walgreens announced the launch of a premium skincare line, aiming to provide luxurious beauty services at affordable prices. Well-known beauty brands such as L’Oréal, CeraVe, Revlon, and OLAY are all available on Walgreens’ official website.
Walgreens’ international business generated $6 billion in sales, slightly exceeding analysts’ expectations of $5.8 billion. Although the company revived discussions last year about selling its Boots pharmacy chain, it has since shelved plans for an initial public offering. Wentworth reaffirmed his commitment to investing in Boots and unlocking its potential.
