Walgreens considers shuttering hundreds of underperforming stores

Tom Murphy, Associated Press

DEERFIELD, Illinois (AP) — Walgreens is finalizing a scheme to hole its U.S. business that could consequence successful closing hundreds of further stores complete nan adjacent 3 years.

CEO Tim Wentworth told analysts Thursday greeting that “changes are imminent” for astir 25% of nan company’s stores, which he said were underperforming. The drugstore concatenation presently runs much than 8,600 successful nan United States.

Wentworth said nan company’s scheme could see nan closing of a “significant portion” of those astir 2,100 underperforming stores if they don’t improve.

Company leaders said they’ve already closed 2,000 locations complete nan past 10 years. Overall, nan institution runs astir 12,500 drugstores worldwide.

“We are astatine a constituent wherever nan existent drugstore exemplary is not sustainable and nan challenges successful our operating situation require we attack nan marketplace differently,” he said.

Walgreens and awesome competitors for illustration CVS and Rite Aid — which is going done a bankruptcy reorganization — person been closing stores arsenic they set to an array of challenges to their businesses. They see include years of tight reimbursement for their prescriptions and rising costs for moving their locations.

Plus, analysts opportunity they’ve besides been deed by increasing title from Walmart, Amazon and different discount retailers complete income of equipment sold extracurricular their shop pharmacies. Consumers besides thin to turn much value conscious erstwhile ostentation rises, and drugstores mostly person higher prices than those discounters.

“Our customers person go progressively selective and value delicate successful their purchases,” said Wentworth, who joined nan institution past autumn and has been conducting a reappraisal of its business.

Walgreens besides has been closing VillageMD superior attraction clinics it had been installing adjacent to its stores successful bid to turn its beingness arsenic a wellness attraction provider. The institution had launched an fierce description of those clinics nether erstwhile CEO Rosalind Brewer. But Walgreens said successful March that it was reversing people and closing astir 160 of nan clinics.

Primary attraction clinics for illustration nan ones VillageMD run thin to suffer money their first mates years arsenic they build a diligent guidelines and amended health. Jefferies expert Brian Tanquilut has said nan caller clinics were burning a batch of rate and racking up losses.

But Wentworth said Thursday those clinics were now connected a “clearer way to profitability.”

The CEO besides said his institution is talking to drugstore use managers to “ensure that we are paid fairly” and moving to turn different parts of its business for illustration specialty pharmacy. That helps group pinch analyzable aliases chronic aesculapian conditions.

Walgreens Boots Alliance Inc. besides reported that it missed net expectations and trim its yearly forecast.

The institution earned $344 cardinal successful its fiscal 3rd quarter, pinch adjusted results totaling 63 cents per share. Revenue roseate astir 3% to $36.35 billion.

Analysts were looking for net of 68 cents per stock connected $35.9 cardinal successful revenue, according to FactSet.

Walgreens now expects adjusted net to scope from $2.80 to $2.95 for its fiscal year, which ends successful August. That’s down from a forecast of $3.20 to $3.35 per stock that it had narrowed successful March.

Analysts expect $3.20 per share.

That guidance trim was not “overly shocking to america arsenic nan institution now originates nan adjacent limb of its turnaround,” Leerink Partners expert Michael Cherny said successful a investigation note.

But nan wide results amazed investors. Shares of nan Deerfield, Illinois, institution plunged 24% to $11.89 Thursday greeting while nan S&P 500 scale roseate slightly. Walgreens shares person already shed much than half their worth truthful acold this year.