Walgreens Boots Alliance plans to close 1,200 stores over the next three years, with 500 closures set for next year, due to low drug reimbursement rates and slower consumer spending.
They are carefully reviewing 800 others.
On Tuesday, the Deerfield, Illinois-based company said it would shutter roughly 14% of its U.S. locations and redeploy the majority of the workers impacted. “We are in a turnaround,” Tim Wentworth, the drugstore chain’s CEO, told an earnings call.
“The closure of so many stores is emblematic of a company that is in trouble and is trying to course correct,” commented Neil Saunders, managing director of GlobalData. “Walgreens spent years building its business through acquisitions and completely neglected the fundamentals of its stores and its retail operations,” the analyst added.
Walgreens cut prices on 1,300 products across its U.S. stores in May, following other retailers’ efforts to appeal to inflation-weary customers.
Pharmacies—both independent locations and retail chains—are closing around the country amid low reimbursement rates for pharmacy care and low dispensing fees for Medicaid enrollees.
Like its competitors, Walgreens is feeling the impact as millions of Americans have lost health insurance since the end of a pandemic policy that guaranteed Medicaid coverage during the health emergency. After Medicaid enrollment ballooned during the pandemic, millions have been moved out of the healthcare program for low-income Americans. An SVP and the company’s chief pharmacy officer, Rick Gates, noted a dynamic “where they have not picked up coverage as quickly.”
Walgreens is leaving New York City due to crime.
Walgreens/Duane Reade had 235 stores in New York and now has 82. They will close select stores in Manhattan and the city in general (in high-crime areas).
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