Walgreens Plans 'Significant' Store Closures As It Faces 'Difficult Operating Environment'
Walgreens expects to close a “significant” number of stores in the face of “headwinds,” but the pharmacy chain has not specified how many retail locations it plans to shutter.
Parent company Walgreen Boots Alliance, Inc. (NASDAQ:WBA) announced the plan to close an undisclosed number of its roughly 8,700 stores on Thursday when it released earnings for this year’s third quarter.
The Deerfield, Illinois-based retailer said it was “finalizing [a] significant multiyear footprint optimization program to close certain underperforming U.S. stores” as part of an update to a strategic review outlined in its earnings release.
Walgreens did not make further mention of the planned closures in the release, but CEO Tim Wentworth acknowledged that the company was dealing with challenges.
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“We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins,” he said in a statement.
“Our results and outlook reflect these headwinds, despite solid performance in both our International and U.S. Healthcare segments.”
He also said that Walgreens is focused on its core business retail pharmacy as it strives for a business turnaround.
“We are addressing critical issues with urgency and working to unlock opportunities for growth,” he said.
Walgreens posted $344 million in net profit for the third quarter, up from a $118 million profit posted during the same period last year.
Rite Aid Corporation (OTC:RADCQ) is also facing difficulties as it goes through bankruptcy proceedings. The pharmacy chain will ask a U.S. bankruptcy court to approve a restructuring plan on Thursday aimed at reducing $2 billion in debt and transferring control of the company to a group of its lenders, Reuters reported.
Price Action: Walgreen’s shares were down 25% to $11.73 at the time of publication Thursday.
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