Walgreens Boots Alliance (WBA) said Tuesday it will close 1,200 stores over the next three years as new CEO Tim Wentworth plots a turnaround at the struggling pharmacy chain hit by sluggish consumer spending and low drug reimbursement rates.
Walgreens shares rose 7% before the bell on Tuesday.
The company also narrowly beat Wall Street’s lowered estimates for fourth-quarter adjusted earnings, forecasting full-year earnings largely in line with expectations.
Pharmacy chains are facing the most turbulent times in recent history, as consumers avoid expensive groceries and pressure mounts on the payments they receive from drug middlemen to fill prescriptions.
As a result, Walgreens stock is trading near a 30-year low and is down 65% this year, making it the worst performing stock on the S&P 500 index.
CEO Wentworth has unveiled a series of changes since taking the top job last year, including the firing of several mid-level executives and a $1 billion cost-cutting program.
“This turnaround will take time, but we are confident it will deliver significant financial and consumer benefits in the long term,” Wentworth said in a statement.
The closures were announced in June, but the company had not disclosed the number of affected stores at that time. It had more than 8,000 stores in the United States as of August 31 last year.
In the fourth quarter of fiscal 2024, Walgreens said it had recorded impairment charges on home care provider CareCentrix’s goodwill and equity investments in China.
Excluding these items and other costs, the company earned 39 cents per share on an adjusted basis. Analysts had expected earnings of 36 cents per share, according to LSEG data.
Comparable retail sales fell 1.7%, hurt by “a challenging retail environment”. Sales of groceries and other items at Walgreens stores have been hit as consumers increasingly hunt for bargains and avoid more expensive items.
For fiscal 2025, Walgreens expects adjusted earnings of $1.40 to $1.80 per share, versus estimates of $1.73 per share.
(Reporting by Manas Mishra in Bengaluru; Editing by Saumyadeb Chakrabarty)
