Walgreens confirms 'meaningful percentage' of 8,600 stores to close after sales slump
Wallgreens' parent company has confirmed thousands of stores are set to close
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Walgreens has announced plans to shut down a "significant number" of its 8,600 locations across the US in a blow to the economy.
Store closures have decimated local communities in the years following the Covid pandemic with the pharmacy giant appearing to be no exception.
This comes shortly after the business slashed its profit forecast for the fiscal year in a sign consumers are easing on their in-store spending.
During Walgreens Boot Alliance's Q3 earning results, the company did not specify how many sites will be closed and where they will be located.
However, CEO Tim Wentworth told the Wall Street Journal a "meaningful per cent" of the around 25 per cent of sites that are underperforming could close for good.
Any potential closures will be based on the profitability of stores, their proximity to other closures and whether any sites are struggling to combat theft.
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The parent company did not share which stores would close
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The 125-year old company's shares have plummeted by more than 15 per cent in premarket trading, following a 40 per cent over the course of the year so far.
Neil Saunders, a managing director of GlobalData, claims Walgreens's "lacklustre" offerings and high prices are to blame for struggling sales.
He explained: "The numbers from US retail – where sales plunged by 4 per cent – are particularly disappointing, although not entirely surprising.
"This long-established trend has been exacerbated by the cost-of-living crisis which has seen customers shopping around more for the best deals and bargains.
"Walgreens does itself no favours in this environment by having a lacklustre proposition and broadly uncompetitive prices compared to mass merchant."
Despite Walgreens Boots Alliance's hitting $36.4billion, up 2.5 per cent on a current currency basis, retail sales were down 2.3 per cent compared to Q3 of last year.
Notably, the pharmacy company's UK business Boots saw retail sales jump by six per cent over the same period.
Even with this improvement, the wider pharmacy retail group adjusted its full-year 2024 adjusted earnings per share (EPS) to between $2.80billion and $2.95billion.
This was in response to "challenging" trends within the pharmacy sector and a worse-than-expected consumer environment.
Wentworth said: "We continue to face a difficult operating environment, including persistent pressures on the US consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins.
LATEST DEVELOPMENTS:
Despite a sales slump in the US, Boots in the UK has seen its retail performance improve
PA IMAGES"Our results and outlook reflect these headwinds, despite solid performance in both our International and US Healthcare segments.
"Informed by our strategic review, we are focused on improving our core business: retail pharmacy, which is central to the future of healthcare.
"We are addressing critical issues with urgency and working to unlock opportunities for growth.
"Many of these actions will take time, but I am confident that we have the right team and the right strategy to lead a business turnaround for the Walgreens that our customers and patients need."