Walgreens is planning to close a substantial number of stores as it undergoes a turnaround.
The company has announced it will shut down a “significant” number of its 8,600 stores nationwide, perhaps as many as 25% of those locations, though Walgreens has not yet made a final decision on the number.
The timing of the shutdown is somewhat nebulous right now. The Wall Street Journal reported the closings would take place over the next few years, but CNBC’s Bertha Coombs reported they could occur over the next few quarters.
Nearly a quarter of all Walgreens stores are not profitable, the company said. Many of those are in urban areas. The company noted that workers at affected stores would be offered positions in other locations and that it did not expect the closures to impact its employee count.
“We continue to face a difficult operating environment, including persistent pressures on the U.S. Consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins,” said CEO Tim Wentworth in a statement. “Our results and outlook reflect these headwinds, despite solid performance in both our international and U.S. Health care segments … We are addressing critical issues with urgency and working to unlock opportunities for growth. Many of these actions will take time.”
Walgreens stock was hammered Thursday in the wake of the news, as well as third-quarter earnings that fell short of analyst expectations and the company’s cutting its profit outlook for the full year, calling the environment for pharmacies a “challenging” one. Earnings per share came in at 63 cents, compared with an expected 68 cents.
Walgreens is a staple in many cities, but has been under pressure of late from online pharmacies run by entities ranging from Amazon to Mark Cuban. Staffing shortages have also proved challenging for the chain.