Walgreens announced that it will shutter 1,200 stores over the next three years — and 500 locations in 2025 alone — as the drugstore giant seeks to slash $1 billion in costs.
The Chicago-based pharmacy chain, which has around 8,700 locations nationwide, told analysts on Tuesday that one in four of its stores are unprofitable.
The closures were announced in June but the company had not disclosed the number of affected stores at that time.
The company has been hit by sluggish consumer spending amid stubbornly high inflation, as well as low drug reimbursement rates, which is the amount of money that healthcare providers or pharmacies are paid for dispensing prescription medications to patients.
Walgreens’ stock is trading near 30-year lows and down 65% this year, making it the worst performing stock on the S&P 500 index.
Shares of Walgreens rose more than 4% in pre-market trading on Tuesday as investors reacted positively to the company’s latest earnings report.
Walgreens narrowly beat Wall Street’s lowered estimates for fourth-quarter adjusted profit, and forecast fiscal-year earnings that were mostly in-line with expectations.
Tim Wentworth, the company CEO, has unveiled a series of changes since taking on the top job last year, including the removal of multiple mid-level executives and a $1 billion cost-cutting program.
“This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” Wentworth said in a statement.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
