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Walgreens’ Plan to Close 1,200 Stores

Walgreens, one of the largest pharmacy chains in the United States, announced it will close around 1,200 stores over the next three years in an effort to cut costs and realign its business. The decision comes as Walgreens Boots Alliance, the parent company, grapples with a near $1 billion operating loss for the quarter ending in August 2024—double the loss from the same period last year. While the closures are a significant part of the company’s strategy to improve profitability, the news reflects broader challenges in the retail and pharmacy sectors.

The closures represent roughly 15% of Walgreens’ 8,000 U.S. locations, with about 500 of these happening in the current fiscal year, which runs through September 2025. These cuts were first hinted at in June when the company acknowledged that consumer spending, particularly among lower-income groups, had been lagging due to inflation and dwindling savings. In fact, 300 of the planned closures were already approved under a previous cost-cutting initiative.

Tim Wentworth, Walgreens Boots Alliance’s CEO, emphasized that the move would help the company adapt to changing consumer behavior. “We’re committed to serving our customers effectively, even as we shift focus and streamline operations,” Wentworth noted during the company’s earnings call. He stressed that while difficult, the store closures were essential to enabling the company to respond to shifts in consumer preferences and emerge stronger in key areas, particularly in health and wellness.

At present, Walgreens operates about 6,000 profitable locations. The company is actively seeking to redeploy most of the workforce from shuttered stores, underscoring its intention to minimize the impact on employees. While Walgreens has not yet revealed which locations will close, the closures are expected to span across the country.

The company’s stock saw an uptick following the earnings report, rising over 10%, as investors responded positively to results that surpassed analysts’ expectations. Yet, this stock boost offers only temporary relief from Walgreens’ longer-term challenges. Like many retailers, the company has faced pressure from inflation, a changing healthcare landscape, and competition from both online and physical stores.

In addition to closing stores, Walgreens is also revamping its approach to inventory. The company plans to be more selective with the brands it carries, focusing instead on expanding its in-house brands. This change is part of a broader shift to become a “destination” for health and wellness products, particularly in categories such as women’s health, where the company believes it has a competitive edge. By rethinking its product lineup, Walgreens hopes to better serve consumers while also enhancing profitability.

While these strategic moves may help Walgreens in the short term, the company’s ability to navigate ongoing economic challenges will ultimately determine its success. The coming years will show whether these store closures and inventory adjustments are enough to keep Walgreens profitable and competitive in an evolving retail landscape.