Walgreens will close 1,200 stores in the US

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Walgreens will close about 1,200 locations over the next three years as the drugstore chain tries to turn around the struggling U.S. company that contributed to a $3 billion quarterly loss.

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The company said Tuesday that about 500 stores will close in the current fiscal year, which should immediately support adjusted earnings and free cash flow. Walgreens did not say where the store closures would take place.

Walgreens operates about 8,500 stores in the United States and several thousand abroad. All stores that will be closed are located in the United States.

Walgreens Boots Alliance Inc. Leaders said in late June that it was finalizing a turnaround plan for its U.S. business, and the push could result in the closure of hundreds of underperforming stores.

The plan announced Tuesday includes closing 300 stores that were approved under a previous cost-cutting plan.

Walgreens CEO Tim Wentworth said in a statement that fiscal 2025, which began last month, will be an important “rebasing year” for the drugstore chain.

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“This change will take time, but we are confident it will deliver significant financial and consumer benefits in the long run,” he said.

Walgreens, like its competitors, has struggled for years with high reimbursements for prescription drugs it sells, as well as other challenges such as rising store operating costs. Plus drugstore chains are coping with greater competition from e-commerce giant Amazon as well as Walmart and Target.

Rival CVS Health Corp. ends a three-year plan to close 900 stores. Another large chain, Rite Aid Corp., emerged from bankruptcy reorganization earlier this year after reducing its store count to about 1,300 locations.

Walgreens is also withdrawing a plan to add primary care clinics next to some of its stores after embarking on an aggressive expansion under previous CEO Rosalind Brewer.

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In August, the Deerfield, Illinois-based company said it was reviewing its U.S. health care business and may sell all or part of its VillageMD clinics business. The announcement came less than two years after the company said it would spend billions to expand its business.

The company started 2024 by cutting the dividend it pays to shareholders to get more cash to grow its business. Then in June, the drugstore chain lowered its fiscal 2024 forecast.

Walgreens said Tuesday that its net loss widened to more than $3 billion in the final quarter of 2024. The company said weaker U.S. retail and pharmacy performance hurt. It also booked high fees related to opioid litigation settlements that the company recognized in previous quarters and an equity investment in China.

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The results exceeded Wall Street expectations. Analysts on average expect earnings of 36 cents per share on revenue of $35.75 billion in the fiscal fourth quarter, according to FactSet.

The company also said it expects adjusted earnings for the new fiscal year to fall between $1.40 and $1.80 per share, with growth in its U.S. healthcare and international operations offsetting declines in U.S. retail pharmacy sales.

For fiscal 2025, analysts expect adjusted earnings of $1.72 per share.

Leerink Partners analyst Michael Cherny said in a research note that the company's fourth-quarter results and outlook for 2025 are not as bad as they could be. But the information released Tuesday “does not answer any of the most important questions surrounding the (Walgreens Boots Alliance) history and improved operating path under still-new CEO Tim Wentworth.”

Walgreens shares rose nearly 4% on Tuesday before the opening bell.

The company's shares have lost nearly two-thirds of their value this year, falling to $9 at Monday's close.

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