Walgreens announced on Tuesday plans to close 1,200 "underperforming" locations by 2027, including about 500 in 2025.
The closing locations will consist of buildings owned by Walgreens and where leases are set to expire in 2025. The company said there is a cost to closing some of its locations, but sees opportunities in subleasing underperforming stores.
Walgreens Global Chief Financial Officer Manmohan Mahajan told investors that 2025 closures would be weighted toward the back half of the fiscal year.
"We are prioritizing closing locations that are cash flow negative, underperforming stores where we own the locations and ones where the lease expirations are coming due in the next few years," he said. "The economic benefits of this approach should begin to be tangible in fiscal 2025 by accelerating the scope of our footprint optimization program and focusing on stores with weakest cash generation."
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Mahajan said it started evaluating 2,000 stores as part of its "optimization efforts." Walgreens said it will focus on improving the cash flow of the 800 locations it decided not to close. In June, the company told investors that it was beginning the process of reviewing its footprint of 8,600 locations.
"However, as has always been the case, we will continuously evaluate this group and all our stores to ensure we ultimately operate with the best possible footprint," Mahajan said.
Walgreens' announcement comes as the company reported soft revenue for fiscal year 2024. Total retail sales were down over 4% in 2024.
"In fiscal 2025, we are focusing on stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow, and continuing to address reimbursement models to support dispensing margins and preserve patient access for the future,” said Tim Wentworth, CEO of Walgreens Boots Alliance. “Fiscal 2025 will be an important rebasing year as we advance our strategy to drive value creation. This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term.”
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