Walgreens will close 1,200 locations as retail sales decline

The first 500 closures will take place over the next 12 months. Chief executive Tim Wentworth said the company would focus on “stabilizing” its retail pharmacy business. “This change will take time, but we are confident it will provide significant financial and consumer benefits in the long term,” Wentworth said.

The store closings — which Walgreens called a “creative footprint optimization program” — were announced Tuesday as part of the pharmacy chain's quarterly earnings report.

Walgreens reported a net loss of $8.6 billion for the fiscal year ended Aug. 31 on overall sales of $147.7 billion. The company's pharmacy sales rose 9.6 percent year over year in the fourth quarter, but retail sales fell 3.5 percent.

GlobalData analyst Neil Saunders said the store closings “symbolize a company that's in trouble and definitely trying to get things right,” noting that it spent years building its business through acquisitions while neglecting retail basics like customer service. He said the company has many stores that are not generating a return on investment.

“Cutting down the dead wood will help the company strengthen its finances over time, but it's effectively a huge admission of failure,” Saunders said.

Stock for the holding company that owns Walgreens gained nearly 16 percent on Tuesday.

Large pharmacy chains have been closing stores in recent years as the traditional pharmacy model has come under pressure from new competition, changing consumer behavior and the pandemic-era boom in vaccine sales. Executives also said consumers are increasingly price sensitive in their purchases.

Walgreens has already closed at least 2,000 locations over the past decade, including several hundred last year CVS announced in 2021 that it would close 900 stores over three years. Rite Aid filed for bankruptcy last year.