Walgreens plans to close a large number of underperforming stores across the United States as part of a “significant multiyear footprint optimization program” meant to offset losses.
The drugstore chain laid out its third quarter earning results in a Thursday press release that was not well-received on Wall Street. Company stocks dropped more than 20% amid news of “challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment.”
Closing the struggling locations is part of Walgreens’ plan to correct course heading into a new quarter. But how many stores will close and the locations of those operations was not disclosed.
In a conference call with industry analysts on Thursday, Tim Wentworth, the CEO of parent company Walgreens Boots Alliance (WBA), described roughly 25% of Walgreens’ stores as “underperforming.”
He shared few other details about the closures, but said the changes would take place over the next three years.
“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,” Wentworth said Thursday.
Wentworth told CNBC that consumers are “absolutely stunned” by current costs, despite the company’s announcement last month to slash prices on hundreds of items in order to retain or regain customers struggling to keep up with inflation.
Wentworth said the “vast majority” of employees at affected stores will be offered jobs elsewhere.
WBA, whose properties include Duane Reade and Farmacias Benavides, employs 33,000 workers in its 12,500 locations throughout North America, South America and Europe.
That includes more than 8,500 stores in the U.S. where some workers, including pharmacists, walked off the job in October to protest unpopular working conditions.
“Pharmageddon,” as the work stoppage was dubbed, had little overall impact on operations, according to pharmacy executives.
