More and more big retail chains are closing stores in the United States, changing the retail environment. Walgreens, a big chain of grocery stores and pharmacies, recently joined the list of companies closing stores nationwide. This news fits a larger pattern in the drugstore business, where businesses struggle with mounting costs, falling sales, and tightening budgets.
Over the Next Three Years, Walgreens Will Close 1,200 Stores
During a results call on October 15, 2024, the company said it would close about 1,200 shops in the U.S. over the next three years. The first 500 shops should close during fiscal year 2025, which began in September 2024.
However, the company has not yet said which stores will be affected. This means that many towns don’t know if their local store will be closed.
This big change is part of Walgreens’ larger plan to fix its business, which has been having many problems. A Reuters story says that the company has had a hard time with slow customer spending and low drug payment rates, which have both hurt its finances.
The Decision Was Made Because of Financial Pressures
Walgreens’ latest statement is a result of ongoing money problems. During the results call, Tim Wentworth, CEO of Walgreens Boots Alliance (Walgreens’ parent company), said that about 25% of the company’s U.S. shops are not doing well.
Since there are over 8,000 shops, about 2,000 are not making enough money to meet their goals. Wentworth did say, though, that about 6,000 shops are still making money.
Walgreens is having trouble paying for its shops because customers aren’t spending much, and the government and insurance companies are putting more pressure on the business. Some of these costs that have been going up are rent, workers, and supplies.
Walgreens told in a statement that its store drug business is still a key part of its long-term plan, but it also said that it is having trouble with money.
The company’s plan to close shops is part of a larger plan to turn things around and ensure its long-term profitability. He says Walgreens will focus on creating value for both its customers and its owners during fiscal year 2025, which he calls a “rebasing” year.
Effects on Nearby Communities
It’s never easy for a business to close a store, and Walgreens is no different. The business said it knows how important its shops are to their areas. Walgreens pharmacists are more than just a place to get medicines in many places. They are also important to local healthcare because they offer flu shots, COVID-19 vaccines, and other necessities.
The store said, “When closures are necessary, we will work with community stakeholders to minimize customer disruptions.” The company also promised to reassign most staff from the affected shops. This means most workers will probably be moved to other close locations instead of fired.
Still, it could greatly affect customers, especially those who live in smaller towns or rural areas. For people who live in areas where Walgreens is the only closed pharmacy, store closings could be inconvenient because they depend on their local store for medicine, medical care, and basic shopping.
Walgreens’ Problems and Losses of Money
Walgreens has been having more money problems lately, which is why they decided to close shops. Although sales went up by 6% during the last quarter, the company recorded a $3 billion loss.
Even though the sales increase is a good sign, it wasn’t enough to make up for the money problems Walgreens has been having because of things like higher store costs and lower payment rates for medicines.
It’s not the first time Walgreens has announced it will be closing many stores. The company announced in June 2023 that it was closing 450 shops, including 150 in the U.S. and 300 in the U.K. By August 2024, all of the stores had closed, which shows that Walgreens has been working on reorganizing its business for a while.
Walgreens Isn’t the Only One Facing Problems in the Industry
It’s not just Walgreens that’s having trouble keeping its shops open. The economy and government rules have put a lot of pressure on the drug business as a whole, causing other businesses to make similar changes.
CVS, Walgreens’ biggest rival, said earlier this month that it would be laying off about 2,900 workers to save money. This comes after CVS said in 2021 that it would close 900 stores over the next three years, with the last stores closing in 2024.
Another big drugstore business, Rite Aid, has been hit hard by money problems. In October 2023, Rite Aid filed for bankruptcy and shut down more than 520 shops as part of its reorganization.
These widespread store closings show the bigger problems the drugstore industry is having. Traditional drugstore shops have difficulty making money because of rising costs, more competition from online stores, and changes in how people shop.
Where Will Walgreens Go From Here?
Walgreens has decided to close shops as part of a longer-term plan to get its business back on track and make money. The company’s CEO, Tim Wentworth, said that this turnaround would take time, but he was confident that the plan would work out and be very good for the business and its users.
As Wentworth said, fiscal year 2025 will be a big year for Walgreens as it tries to restructure its business, improve the performance of its stores, and address its present financial problems.
As part of this reorganization, the company will focus on improving its successful shops, offering more health care services, and overcoming the financial and regulatory problems that have been holding it back.
Conclusion
Over the next three years, Walgreens will close 1,200 shops. This is a big change in the company’s strategy as it tries to make more money. Walgreens is committed to redeploying workers and working with communities to minimize delays. However, customers may still be greatly affected, especially in places where Walgreens is an important part of healthcare and retail services.
People should watch the local news or Walgreens’ ads to see if the closings will affect shops near them. People who live in the affected areas may have to travel farther to get medications or medical care.
This wave of store closings also shows how difficult things are for the drug business as a whole. Big names like CVS and Rite Aid are having the same problems. As these companies continue to change with the times, people may be able to get pharmacy services in very different ways in the next few years.
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