Walgreens CEO announces closure of ‘significant percentage’ of its 8,600 US stores – and confirms services will be cut

WALGREENS has announced the mass closure of thousands of stores as the retailer’s CEO changes strategy.

Tim Wentworth, CEO of Walgreens Boots Alliance, revealed that a “significant percentage” of the chain’s 8,600 locations will be closed.

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The news was confirmed in an interview with Wall Street Journal which saw Wentworth admit the struggling retailer needs a strategy review.

While the exact number of locations slated for closure has not yet been decided, about a quarter of the chain’s stores are being evaluated for not performing well for the company.

This comes after Walgreens Boots Alliance announced the closure of 150 Walgreens stores last year to “optimize profitability.”

YOUR TIME

In an attempt to compete with rival chains like CVS, the company has increased its focus on providing primary care to patients.

The pharmacy network announced in October 2021, that it would invest $5.2 billion in primary care provider VillageMD to “remodel itself as a healthcare provider” that had plans to introduce medical offices in drug stores.

However, in February of this year, Walgreens closed all of its VillageMD clinics in Florida, leaving customers concerned about other locations.

Now, Wentworth has revealed that Walgreens will withdraw its stake in VillageMD, meaning it will no longer be the majority owner.

“We recognize that where we are is a turnaround,” Wentworth told the news outlet.

“We recognize that we need to focus on the parts of the business that we believe are contributing and have a future, and some of these need to change.”

‘WORSE THAN EXPECTED’

The CEO’s comments come ahead of an earnings call on Thursday to discuss the company’s third-quarter financial results.

The retailer’s shares plunged more than 14% after its earnings report did not live up to expectations.

Walgreens was forced to change its earnings outlook for the year amid a “challenging” time for the pharmaceutical industry and a “worse than expected consumer environment in the US”.

“We continue to face a difficult operating environment, including persistent pressures on the US consumer and the impact of recent market dynamics that have eroded pharmacy margins,” the CEO said in the report.

“Our results and outlook reflect these headwinds.”

Instead of earnings of $3.20 to $3.35, the adjusted numbers are now $2.80 to $2.90 per share.

However, the company reported strong performance in its healthcare segment as it surpassed revenue estimates for the quarter.

During Thursday’s meeting, Wentworth is expected to outline his plans for the company under his new strategy.

Wentworth, who took the helm in October, has enacted major changes, including replacing executives at the top of the company.

A strategic review of the 123-year-old company was carried out by the retailer earlier this year as it faces difficulties in the face of financial pressures in the pharmaceutical industry.

We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent market dynamics that have eroded pharmacy margins.

Tim WentworthCEO of Walgreens

As a result of the findings, change will be an ongoing focus for the retailer, the CEO said.

“Retail pharmacy is critical to our future and the overall customer and patient experience,” noted Wentworth.

“It allows for a lot of other things, but it needs to change.”

However, the CEO issued assurances about the brand’s international businesses.

Walgreens is not considering abandoning Boots or Shields Health Solutions, he told the WSJ.

Additionally, he also reassured Walgreens employees that the company will likely be able to offer positions elsewhere as part of a reshuffle when changes occur.

The reduction of Walgreens’ operational footprint is not expected to “result in significant job losses,” according to the WSJ.

In the earnings report, Wentworth sounded confident and resilient, noting that the business had a “solid performance in the U.S. and international healthcare segments.”

“We are focused on improving our core business: pharmaceutical retail, which is critical to the future of healthcare,” he said.

“We are urgently addressing critical issues and working to unlock opportunities for growth.

“Many of these actions will take time, but I am confident we have the right team and the right strategy to lead a business turnaround for Walgreens that our customers and patients need.”