Walgreens to close 1,200 locations as retail sales decline

The first 500 closures will take place over the next 12 months. Chief executive Tim Wentworth said the company will focus on “stabilizing” its retail pharmacy business. “This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” Wentworth said.

The store closures — which Walgreens called an “accretive footprint optimization program” — were announced as part of the pharmacy chain’s quarterly earnings report Tuesday.

Walgreens reported a net loss of $8.6 billion for the fiscal year ending Aug. 31 on overall sales of $147.7 billion. The company’s pharmacy sales in the fourth quarter increased 9.6 percent year-over-year, but retail sales decreased 3.5 percent.

GlobalData analyst Neil Saunders said the store closures are “emblematic of a company that is in trouble and trying to course correct,” noting that it spent years building its business through acquisitions while neglecting retail basics like customer service. The company is left with a lot of stores that aren’t generating a return on investment, he said.

“Cutting out the dead wood will help the company strengthen its financials over time, but it is effectively a huge admission of failure,” Saunders said.

Stock for the holding company that owns Walgreens was up around 12 percent shortly after trading began Tuesday.

Large pharmacy chains have been closing stores in recent years as the traditional pharmacy model has been put under pressure by new competition, changing consumer behavior and a comedown from the pandemic-era surge in vaccine sales. Executives have also said consumers are increasingly price-sensitive in their purchases.

Walgreens has already closed at least 2,000 locations over the past decade, including several hundred in the past year. CVS announced in 2021 that it would shutter 900 stores in three years. Rite Aid filed for bankruptcy last year.