Walgreens announced that it will close 1,200 stores over the next three years, and 500 in 2025 alone, as the drugstore giant aims to cut costs by $1 billion.
The Chicago-based pharmacy chain, which has about 8,700 stores across the U.S., told analysts Tuesday that a quarter of its stores are unprofitable.
The closures were announced in June, but the company did not say at the time how many stores were affected. At the time, Walgreens said it could close up to a quarter of its more than 2,000 stores.
The company has been hit by weak consumer spending amid persistently high inflation, as well as low drug reimbursement rates paid to healthcare providers and pharmacies for dispensing prescriptions to patients. There is.
Walgreens stock has been hovering near 30-year lows this year, and is down 65% this year, making it the worst-performing stock in the S&P 500.
Walgreens stock rose more than 4% in premarket trading Tuesday as investors reacted favorably to the company's latest earnings report.
Walgreens' fourth-quarter adjusted profit narrowly beat Wall Street's lower expectations, and its fiscal year profit forecast was also roughly in line with expectations.
CEO Tim Wentworth unveiled a series of changes since taking the top job last year, including the firing of several mid-level executives and a $1 billion cost-cutting program.
“While this turnaround will take time, we are confident that the long-term benefits will be significant both economically and for consumers,” Wentworth said in a statement.
Walgreens announced in the fourth quarter of fiscal 2024 that it recorded an impairment charge on the goodwill of home care services company CareCentrix and its equity investment in China.
Excluding these items and other charges, the company earned 39 cents per share on an adjusted basis. Analysts had expected earnings of 36 cents per share, according to data compiled by LSEG.
Like-for-like retail sales fell 1.7%, hurt by a “challenging retail environment.” Sales of groceries and other items at Walgreens stores have suffered as consumers increasingly seek bargains and shun more expensive items.
Walgreens said it expects adjusted earnings to be $1.40 to $1.80 per share in fiscal 2025, compared with the expected $1.73 per share.
with post wire
