Walgreens announced it will close 1,200 stores over the next three years — and 500 locations in 2025 alone — as the drugstore giant looks to cut $1 billion in costs.
The Chicago-based pharmacy chain, which has about 8,700 locations nationwide, told analysts Tuesday that one in four of its stores is unprofitable.
The closures were announced in June but the company did not disclose the number of stores affected at the time.
The company has been hit by sluggish consumer spending amid extremely high inflation as well as low drug reimbursement rates, which is the amount that healthcare providers or pharmacies are paid for dispensing prescription drugs 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 Tuesday as investors reacted positively to the company’s latest earnings report.
Walgreens beat Wall Street’s low estimates for fourth-quarter adjusted profit by a narrow margin, and forecast fiscal year earnings that mostly met expectations.
The company’s CEO Tim Wentworth has announced a number of changes since taking over the top job last year, including the removal of several mid-level executives and a $1 billion cost-cutting program.
“This change will take time, but we are confident it will deliver significant financial and consumer benefits over the long term,” Wentworth said in a statement.
