Walgreens said Tuesday it would close 1,200 stores over the next three years as new CEO Tim Wentworth plans a turnaround at the struggling drugstore chain operator, which has been hit by sluggish spending. of consumers and low drug reimbursement rates.
The company also narrowly beat Wall Street’s lowered estimates for fourth-quarter adjusted earnings and forecast earnings for the fiscal year that were mostly in line with expectations.
Pharmacy chains are facing the most turbulent time in their recent history, as consumers shun high-priced grocery products and increase pressures on the payments they receive from drug brokers for filling prescriptions.
As a result, Walgreens stock is trading near 30-year lows and is down 65% this year, making it the worst-performing stock in the S&P 500 index.
Wentworth has unveiled a series of changes since taking the top job last year, including the ouster of several mid-level executives and a $1 billion cost-cutting program.
Walgreens said Tuesday it would close 1,200 stores over the next three years (File image)
The closures were announced in June but the company had not revealed the number of stores affected at that time (File image)
“This change will take time, but we are confident it will produce significant long-term financial and consumer benefits,” Wentworth said in a statement.
The closures were announced in June, but the company had not disclosed the number of stores affected at that time. It had more than 8,000 stores in the United States as of August 31 of last year.
In the fourth quarter of its fiscal 2024, Walgreens said it recorded goodwill impairment charges for home care provider CareCentrix and equity investment in China.
Excluding those items and other charges, the company earned 39 cents per share on an adjusted basis. Analysts had expected a profit of 36 cents per share, according to data compiled by LSEG.
Comparable retail sales fell 1.7%, affected by “a challenging retail environment.” Sales of groceries and other items at Walgreens stores have taken a hit as consumers increasingly look for bargains and avoid higher-priced items.
For fiscal 2025, Walgreens said it expects adjusted earnings of $1.40 to $1.80 per share, versus estimates of $1.73 per share.
More to follow.