Major Pharmacy Chain Set to Close 'Significant' Number of Stores

Walgreens announced plans to close many underperforming stores across the U.S. Profitability and declining margins are ongoing challenges.

This move is part of Walgreens' multi-year optimization program. CEO Tim Wentworth told The Wall Street Journal that a "meaningful percent" of the over 8,700 stores will close.

Shares tumbled in pre-market trading on Thursday. The company cut its 2024 profit forecast. Over the past year, shares have dropped over 45%.

"We continue to face a difficult operating environment," Wentworth said. "Persistent pressures on the U.S. consumer and marketplace dynamics have eroded pharmacy margins."

Sales at stores open for at least a year slipped 2.3% compared to last year. Walgreens blames this on a challenging retail environment. Increased promotional activity and higher shrink levels also hurt margins.

The company now expects fiscal 2024 earnings of $2.80 to $2.95 per share. This is down from the previous estimate of $3.20 to $3.35 per share.

This change reflects challenging pharmacy industry trends. A worse-than-expected consumer environment also plays a role, according to the company.

Despite headwinds, international and U.S. healthcare segments performed well. "We are focused on improving our core business: retail pharmacy," Wentworth said. "We are addressing critical issues with urgency and working to unlock growth opportunities."