Walgreens to close 'significant' number of US stores due to financial struggles

In a significant move, Walgreens announced plans to close a substantial number of its 8,700 stores across the United States due to declining profits and reduced consumer spending. The exact number of closures and locations affected were not specified, but CEO Tim Wentworth indicated that underperforming stores, those in close proximity to each other, or facing theft issues would be targeted. The decision comes as the company revised its profit forecast for fiscal year 2024, citing lackluster deals, high prices, and a shift in consumer behavior towards seeking better bargains. The news of the store closures caused Walgreens' shares to plummet by more than 15% in premarket trading, contributing to a 40% decline in share value for the year. Analysts predict an adjusted profit of $2.80 to $2.95 per share for the financial year ending in August, down from the initial forecast of $3.20 to $3.35 per share. The company's struggles are part of a broader trend affecting major drugstore chains like CVS and Rite Aid, who have also faced challenges in recent years due to declining prescription profits and changing consumer habits. Walgreens' decision to close stores is part of a multiyear optimization program aimed at improving profitability and streamlining operations. The company's strategic review will focus on shuttering stores that are not financially viable or are facing operational difficulties. The move reflects a shift in the retail landscape, where consumers are increasingly price-sensitive and selective in their shopping choices, posing challenges for traditional brick-and-mortar retailers like Walgreens. The closure of hundreds of stores in the UK and the US earlier in the year, coupled with the revised profit outlook, underscores the ongoing challenges faced by Walgreens in adapting to changing market dynamics. The company's stock plunge and the need to write down the value of its VillageMD merger by $6 billion highlight the financial pressures it is currently navigating. As the retail industry continues to evolve, Walgreens' restructuring efforts signal a proactive approach to addressing operational inefficiencies and positioning itself for future growth in a competitive market environment.