Walgreens will close 1,200 stores as CEO Wentworth seeks turnaround

Walgreens Boots Alliance (WBA) said Tuesday it will close 1,200 stores over the next three years as new CEO Tim Wentworth plans a turnaround at the struggling pharmacy chain operator, which has suffered from sluggish consumer spending and low drug reimbursement rates.

The company narrowly beat Wall Street’s cut estimates for adjusted profit in the fourth quarter and forecast a profit for the fiscal year that was mostly in line with expectations.

Its shares rose 12.3% to $10.11 in morning trading. The stock has fallen 65% this year to its most recent close, making it the worst performer in the S&P 500 index.

“At first glance, (the forecast) looks better than the worst-case scenario,” said Michael Cherny, an analyst at Leerink Partners, adding that Walgreens continues to be plagued by macroeconomic challenges that did not ease in the quarter.

Pharmacy chains face numerous challenges as consumers avoid high-priced groceries and pressure increases on the payments they receive from pharmacy benefit managers for filling prescriptions.

CEO Wentworth has announced a series of changes since taking office last year, including the layoffs of several mid-level executives and a $1 billion cost-cutting program.

“This turnaround will take time, but we are confident it will deliver significant financial and consumer benefits over the long term,” Wentworth said in a statement.

Walgreens said it would close 500 stores in 2025 and focus on locations with negative cash flow and underperforming stores whose leases expire in the next few years, CFO Manmohan Mahajan said. As of August 31 last year, there were over 8,000 stores in the United States.

In the fourth quarter of its fiscal 2024, Walgreens recorded goodwill impairment charges related to its home care unit CareCentrix and equity investments in China. On a reported basis, the company reported a loss of $3 billion, down from $180 million a year ago.

Excluding those items and other costs, the company earned 39 cents per share. According to LSEG, analysts had expected a profit of 36 cents.

For fiscal 2025, Walgreens expects adjusted earnings of $1.40 to $1.80 per share, versus estimates of $1.73.

(Reporting by Manas Mishra and Sneha SK in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel)