Walgreens Closing 200 Stores in Cost-Saving Move
DEERFIELD, Ill. — There will be fewer street corners with a Walgreens drugstore now that the company is moving forward with plans to close approximately 200 locations in the United States.
"After a rigorous analysis, the company has identified additional opportunities for cost savings, primarily in its Retail Pharmacy USA division," the company said during an earnings announcement for its second quarter and first six months of fiscal year 2015. "These additional opportunities will increase the total expected cost savings program by $500 million to a projected $1.5 billion by the end of fiscal 2017."
In addition to the store closings, Walgreens will focus on significant areas including plans to reorganize corporate and field operations; drive operating efficiencies; and streamline information technology and other functions.
"These actions are designed to restructure and invest in the company's future in a way that is better for customers and simpler for employees, resulting in a faster and more agile company," the company reported.
The store closings that Walgreens announced Thursday amount to only about 2 percent of the 8,232 drugstores the company runs in the United States, Puerto Rico and the U.S. Virgin Islands. The company hasn't finalized the list of stores it will close, but Walgreen Co. President Alex Gourlay told analysts it was looking at locations where the population seemed to be moving away, The Associated Press reported.
"This really is just getting the right stores in the right places," he said.
Executive Vice Chairman and Acting CEO Stefano Pessina said in a statement from Walgreens that he remains "as optimistic as ever" about the company's future, but it needs to work proactively to address challenges like growing pressure on reimbursement for pharmaceuticals and competition.
The drugstore chain has no plans to shrink in the wake of its combination with European health and beauty retailer Alliance Boots, according to the news outlet.
The Deerfield-based company expects to open roughly the same number of stores and will consider more mergers and acquisitions, even as it continues to digest a nearly $16-billion deal that finalized its combination with Alliance Boots, which runs the United Kingdom's largest pharmacy chain, the AP reported.