January 1, Major Pharmacy Shutting Numerous Stores: Find Out Why Profits are Plunging

Walgreens plans to close a significant number of underperforming stores across the U.S. The company faces challenges with profitability and declining margins.

The closures are part of Walgreens’ multi-year footprint optimization program. CEO Tim Wentworth did not specify the number of affected stores but said a “meaningful percent” would shutter.

Walgreens shares dropped in pre-market trading on Thursday when the company cut its 2024 profit forecast. Shares have fallen over 45% during the past year.

Wentworth mentioned a difficult operating environment, including pressures on the U.S. consumer and eroded pharmacy margins.

Walgreens reported a 2.3% sales slip at stores open for at least a year compared with the year-ago quarter. A challenging retail environment was blamed.

Additionally, retail margin was negatively affected by increased promotional activity and higher shrink levels (loss of inventory from factors such as theft).

The company revised its fiscal 2024 full-year adjusted earnings expectation to $2.80 to $2.95 per share, down from the previous estimate of $3.20 to $3.35 a share.

Challenging pharmacy industry trends and a worse-than-expected consumer environment were cited as reasons for the change.

Despite facing these headwinds, the company saw a solid performance in its international and U.S. healthcare segments, according to Wentworth.

Wentworth stated, “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.”

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