Walgreens Is Closing Hundreds Of Locations Amid a Major Drop In Sales
The list of grocery store closures in 2023 just keeps growing and not even the biggest retailers in the country have been immune to the trend. Walgreens—the fifth-largest food retailer in the United States by sales, per the Progressive Grocer—has confirmed that it will close 150 stores in the United States and another 300 stores in the United Kingdom.
The company announced the closures as it reported that its net earnings fell to $118 million during the latest quarter that ended on May 31, a sizable 60% decrease from the prior year, Retail Dive reported. During an earnings call last week, Walgreens CEO Rosalind Brewer said there were a couple of factors that "held back" the company's earnings during the quarter.
For one, she said that demand for some COVID-19 services was lower than expected. The number of COVID-19 tests conducted in the quarter was "down sharply" and the number of COVID-19 vaccines Walgreens administered in the quarter dropped 83% from the prior year, Brewer said.
"We are in turn taking the prudent step of further reducing our expectations for COVID contributions going forward," she said.
Additionally, Brewer noted that Walgreens customers have been cutting back on spending as they continue to deal with high inflation rates and "an uncertain economic outlook."
The decision to shutter hundreds of stores is part of a larger effort Walgreens is currently undertaking to cut costs. Walgreens CFO James Kehoe revealed during last week's earnings call that the company's cost-cutting initiative also recently led them to let go of 500 employees as part of an organization restructuring. Those 500 employees comprised about 10% of its corporate and U.S. support office workforce, Kehoe said.
It remains unclear for now which 150 Walgreens stores in the United States will close down. When contacted for more details, a Walgreens representative said that the company had no additional information to share about which specific locations will be impacted. However, the representative did specify that the American stores will close by the end of Walgreens' 2024 fiscal year, which concludes at the end of August 2024. The United Kingdom locations will close within the next 12 months, the representative said.
With these closures, Walgreens will join a growing list of grocery chains shuttering locations this year. Walmart, the top grocery retailer in the United States in the Progressive Grocer's ranking, is one of them. The chain is closing around two dozen underperforming stores in 2023, according to the latest tally from NJ.com.
Sprouts Farmers Market also closed 11 underperforming locations in the first half of the year as it shifted its focus to smaller, newer store prototypes.
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