Walgreens to take a hard look at underperforming stores, could shutter hundreds more
Walgreens is finalizing a plan to fix its business that could result in the closure of hundreds of additional stores in the next three years
Walgreens is finalizing a plan to fix its U.S. business that could result in closing hundreds of additional stores over the next three years.
CEO Tim Wentworth told analysts Thursday morning that “changes are imminent” for about 25% of the company's stores, which he said were underperforming. The drugstore chain currently runs more than 8,600 in the United States.
Wentworth said the company's plan could include the closing of a “significant portion” of those roughly 2,100 underperforming stores if they don't improve.
Company leaders said they’ve already closed 2,000 locations over the last 10 years. Overall, the company runs about 12,500 drugstores worldwide.
«We are at a point where the current pharmacy model is not sustainable and the challenges in our operating environment require we approach the market differently,» he said.
Walgreens and major competitors like CVS and Rite Aid — which is going through a bankruptcy reorganization — have been closing stores as they adjust to an array of challenges to their businesses. They include include years of tight reimbursement for their prescriptions and rising costs for running their locations.
Plus, analysts say they’ve also been hit by growing competition from Walmart, Amazon and other discount retailers over sales of goods sold outside their store pharmacies. Consumers also tend to grow more price conscious when inflation rises, and drugstores generally have higher prices than those discounters.
“Our customers have become increasingly selective and price sensitive in their purchases,” said Wentworth, who joined the company last fall
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