Walgreens Boots Alliance will close 1,200 stores in the next three years, including 500 closures during its 2025 fiscal year, which will end in August 2025, according to the company’s release discussing its FY 2024 performance. The retailer also is refocusing its operating model “to its legacy strength as a retail pharmacy-led company,” said Tim Wentworth, CEO of Walgreens in a conference call discussing the results. “This reorientation allows us to leverage our key strategic assets of consumer trust, convenience and relevance.”
There may be additional store closures further out. “We have over 8,000 stores [in the U.S.], of which the majority, approximately 6,000, are profitable,” said Wentworth. “This solid base supports our conviction in a retail pharmacy-led model that is relevant to our consumers, and we intend to invest in these stores over the next several years.”
Walgreens is keeping a close eye on the full complement of unprofitable stores. For these remaining 800 stores, “we are focused on improving their operating performance and cash flows,” said Manmohan Mahajan, Global CFO at Walgreens during the conference call. “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.”
Regarding the 500 closures planned for the current fiscal year, Mahajan said “we expect this activity to be weighted toward the back half of the year,” meaning the first half of calendar 2025. “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. The economic benefits of this approach should begin to be tangible in fiscal 2025,” he said, adding that the in-year benefit from the footprint optimization program would be approximately $100 million in adjusted operating income.
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Walgreens had first outlined its turnaround plans in June 2024. For its 2024 fiscal year, which ended Aug. 29, 2024, the retailer had $147.6 billion in sales, up from the $139.1 billion generated the previous fiscal year. However, Walgreens had a net loss of $15.4 billion in FY 2024, compared to a $3.5 billion loss in FY 2023.
Walgreens did not provide specific information on the locations of the stores slated for closure.
