Struggling Walgreens Is Closing a 'Significant Portion' of Stores
From Walmart to the discount grocer 99 Cents Only Stores, a growing list of grocery chains have been struggling with significant store closures in 2024. Walgreens is now the latest chain to join that list as it contends with declining earnings and mass layoffs.
In a June 27 call with investors, Walgreens CEO Tim Wentworth announced that the company plans to shutter a "significant portion" of underperforming stores over the next three years. The executive said that Walgreens continues to struggle in today's "difficult operating environment," citing "persistent pressures" on consumers in the United States and an erosion in pharmacy margins.
Walgreens currently operates roughly 8,700 locations in the United States and Puerto Rico, about 25% of which are underperforming, The company is working to finalize the exact number of stores to be shuttered and said it will provide an update once it has reached a decision.
Wentworth warned that they may shutter even more underperforming locations in the future if their performance doesn't improve.
"While it is not an easy decision to close the store, we will work to minimize customer disruptions. And importantly, as we have done in the past, we intend to redeploy the vast majority of the workforce in those stores that we close," he said.
The news about the planned closures comes after a difficult year for the pharmacy and convenience store chain. Walgreens shuttered a whopping 450 stores across the United States and the United Kingdom last summer after its net earnings fell by 60% in the third quarter of 2023.
At the time, the company blamed the declines on a pullback in consumer spending and lower demand for COVID-19 services like vaccines. Walgreens underwent a restructuring and laid off about 500 employees to cut costs, representing about 10% of its corporate and U.S. support office workforce.
While sales increased throughout 2023 and are still climbing in 2024, other areas of Walgreens' business have continued to since last summer. The company has reported declining earnings, laid off hundreds of additional workers to save cash, shuttered two of its distribution centers, and closed 160 VillageMD clinics. (VillageMD is a primary care company Walgreens has invested in since 2020.)
Walgreens' latest decision to shutter even more stores is part of an effort to get the business back on track. As part of this initiative, Walgreens has also lowered prices, streamlined its product assortment, and plans to reduce its stake in VillageMD so it will no longer be the majority owner.
When contacted for additional details and comment on these expected closures, Walgreens shared the following statement with Eat This, Not That!:
"We are repositioning our store footprint for the future. Approximately 25% of Walgreens stores are not contributing to our long-term strategy. We're finalizing an optimization program that we expect will include closing a significant portion of these locations over the next three years. We are also taking a series of actions and making investments to enhance the customer and patient experience."
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