Walgreens is pressing ahead with plans to shut stores
The struggling pharmacy giant previously announced plans to close over a thousand stores by 2027. The latest scale-back doomed five locations in California.
Store managers in Whittier, Los Angeles, Orange, Placentia, and Stanton, California received notice that their stores will permanently shutter.
All five stores will close by the end of March. Walgreens hopes to transfer 93 impacted employees to nearby locations.
‘It is never an easy decision to close a store,’ Marty Maloney, a director of media relations for the pharmacy brand, told the Los Angeles Daily News.
‘We know that our stores are important to the communities that we serve, and therefore do everything possible to improve the store performance. When closures are necessary, like those here in California, we will work in partnership with community stakeholders to minimize customer disruptions.’
The company didn’t immediately respond to Daily Mail’s request for comment.
Nearly every pharmacy chain across the U.S. has laid out plans to shutter stores nationwide. But Walgreens’ struggles are particularly pronounced.
Walgreens announced a slate of closures across California
Walgreens operates like a traditional pharmacy in an industry that’s increasingly impacted by technology advancements and changes in customer behavior.
The retail model in its pharmacies is two-fold: the stores attract customers by fulfilling prescriptions while offering a smattering of at-home items at higher prices than large-scale stores.
But customers are changing their habits.
Instead of opting for higher-priced brick-and-mortar purchases, Americans are increasingly purchasing items online.
Prescription delivery services are also becoming more popular, reducing foot traffic in dozens of Walgreens stores.
Both changes in the economy have threatened Walgreens’ bottom line. But the company may be less adept to changes compared to its rivals.
CVS, its biggest competitor, has greater scale, giving the brand greater leverage to negotiate prices with insurers and healthcare providers.
Walgreens operated around 8,000 before the slate of closures. CVS has over 9,000.
Walgreens has operated thousands of stores with prescription fulfillment and retail sales models
The company’s CEO said he hopes to turn the company’s fortunes with a series of cost-cutting measures – including over a thousand store closures
Walgreens is also more reliant on retail essentials like snacks and household goods — a business segment that has been losing profitability.
Front-end sales represent over a quarter of Walgreens’ retail operations. CVS reported only 21 percent of its sales come from consumer goods.
A spotlight shone on the industry in October 2023, when another competitor, Rite Aid, filed for bankruptcy.
The company, struggling with mounting debt and litigation over its alleged contribution to the opioid epidemic, shut down 150 ‘underperforming’ stores after the filing.
Rite Aid has since emerged from bankruptcy, but also features a greatly reduced store headcount.
There are now around 2,000 Rite Aid locations in the U.S.
Walgreens’ CEO, Tim Wentworth, said the brand has plotted a turnaround and doesn’t expect to file bankruptcy.
Still, the company’s stock price is trading around 30-year lows and decreased 65 per cent last year.
‘This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,’ said Wentworth in a statement.
