Walgreens plans to close about 1,200 stores over the next three years as it tries to turn around its struggling U.S. business, which caused a quarterly loss of $3 billion.
The company said Tuesday it expects to close about 500 stores this fiscal year, which should provide immediate support to adjusted earnings and free cash flow. Walgreens did not say where the store closures would take place.
Walgreens operates approximately 8,500 stores in the United States and thousands internationally. All of the stores closing are in the United States.
Walgreens Boots Alliance Inc. executives said in late June that they were finalizing a turnaround plan for its U.S. business that could lead to the closure of hundreds of underperforming stores.
The plan announced Tuesday includes closing 300 stores that had been approved in a previous cost-cutting plan.
Walgreens CEO Tim Wentworth said in a statement that fiscal year 2025, which began last month, will be a significant “year of rebasing” for the drugstore chain.
“While this turnaround will take time, we are confident that the long-term benefits will be significant, both economically and for consumers.”
Walgreens, like its competitors, has long struggled with challenges such as tight reimbursement for the prescriptions it sells and rising store operating costs. Additionally, drugstore chains are dealing with more competition from online retail giants Amazon, Walmart and Target.
Rival CVS Health Corp. is finishing a three-year plan to close 900 stores. Another major chain, Rite Aid Corp., came out of bankruptcy earlier this year after cutting its store count to about 1,300.
Walgreens is also backing away from plans to put primary care clinics next to some stores, after starting an aggressive expansion under former CEO Rosalind Brewer.
The Deerfield, Illinois-based company announced in August that it was reviewing its U.S. health care business and may sell all or part of its VillageMD clinic business. The announcement comes less than two years after the company said it would spend billions of dollars to expand its business.
The company started 2024 by cutting the dividend it pays to shareholders in order to get more cash for business growth. The drugstore chain subsequently revised down its fiscal 2024 outlook in June.
Walgreens announced Tuesday that its net loss ballooned to more than $3 billion in the final quarter of 2024. The company said weaker results in U.S. retail and pharmacies were hurt. The company also recorded significant charges related to an opioid litigation settlement and an equity investment in China that the company recognized last quarter.
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This performance exceeded Wall Street expectations. Analysts on average expected fiscal fourth-quarter sales of $35.75 billion and earnings of 36 cents per share, according to FactSet.
The company also expects adjusted earnings for the new fiscal year to be between $1.40 and $1.80 per share as growth in its U.S. healthcare and international businesses offset declines in U.S. retail pharmacy. He said there was.
Analysts expect adjusted earnings of $1.72 per share in 2025.
Michael Cherney, an analyst at Leerink Partners, said in a research note that the company’s fourth-quarter results and outlook for 2025 were not as bad as expected. But the information released Tuesday “does not answer any of the big questions surrounding[Walgreens Boots Alliance’s]story or operational improvements that are still underway under new CEO Tim Wentworth.”
Walgreens stock rose about 4% Tuesday before the opening bell.
The stock has fallen by nearly two-thirds since the beginning of the year, hitting $9 as of Monday’s close.
