Walgreens said Tuesday it plans to close 1,200 stores over the next three years as it seeks to further downsize its footprint amid flagging sales and changing consumer behavior. <\/p>\n
The pharmacy chain said 500 of the closings would occur over the next 12 months. It estimates a quarter of its 8,700 stores in the U.S. are unprofitable.<\/p>\n
Walgreens announced the closures as part of its fiscal fourth-quarter and full-year earnings, which beat Wall Street’s expectations. In a statement, CEO Tim Wentworth acknowledged the company was in the midst of a ‘turnaround’ that would ‘take time.’<\/p>\n
‘We are confident it will yield significant financial and consumer benefits over the long term,\u201d Wentworth said. <\/p>\n
In June, Walgreens said it planned to close a \u201csignificant\u201d number of its underperforming stores by 2027. Tuesday\u2019s announcement appears to be the company\u2019s first exact estimate of how many locations it will shutter.<\/p>\n
Both Walgreens and rival CVS are facing a difficult operating environment, fighting to be profitable as consumers shift their habits. <\/p>\n
In 2021, CVS said it would close about 900 stores, or about 10% of its U.S. locations, from 2022 to 2024. Rite Aid recently emerged from bankruptcy and will operate as a privately owned company.<\/p>\n
Pharmacy chains have been squeezed in part by changes to the prescription drug market, including lower reimbursements from pharmacy benefit managers (PBMs), the third-party companies that manage prescription drug benefits for health insurance companies. <\/p>\n
PBMs have been recently accused of inflating drug costs and are the target of multiple legislative and regulatory reforms and actions. <\/p>\n
The end result has been a greater number of ‘pharmacy deserts’ across the U.S. <\/p>\n
\u201cThe retail pharmacy industry is going through a period of soul-searching, trying to understand the best model to reach the consumer,\u201d Neil Saunders, GlobalData’s retail managing director, told CNBC in August. <\/p>\n<\/p>\n
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