Walgreens Plans To Close 1,200 Stores Over Next Three Years

KEY TAKEAWAYS

• Walgreens Boots Alliance said Tuesday that it is shutting around 1,200 stores over the next three years, as the drugstore chain moves to turn around its troubled U.S. business.
• The chain said it would shut 500 stores in fiscal 2025, and that the closures would be "immediately accretive" to its adjusted EPS and free cash flow.
• Walgreens also reported fourth-quarter revenue and adjusted EPS that beat Wall Street estimates.
• Shares of the company are rising more than 3% in premarket trading.

Walgreens Boots Alliance (WBA) said Tuesday that it is shutting around 1,200 stores over the next three years, as the drugstore chain moves to turn around its troubled U.S. business.

Walgreens also reported fourth-quarter revenue and adjusted profit that beat Wall Street estimates. Shares of the company are rising more than 3% in premarket trading.

"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," Walgreens Chief Executive Officer (CEO) Tim Wentworth said. 

"This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term," he added.

Walgreens Plans To Close 500 Stores in Fiscal 2025

On Tuesday, Walgreens said it would shut 500 stores in fiscal 2025, and that the closures would be "immediately accretive" to its adjusted earnings per share (EPS) and free cash flow. 

In June, the company said it would finalize a "significant multiyear footprint optimization program to close certain underperforming U.S. stores" when it reported lower-than-forecast third-quarter profit and cut its outlook, but didn't give details. 

Walgreens has around 8,700 drugstores in the U.S., according to its website.

Q4 Revenue, Adjusted EPS Top Estimates

The chain has been struggling with tepid U.S. consumer demand and intense competition. On Tuesday, it reported adjusted EPS of 39 cents on revenue of $37.55 billion, both slightly higher than consensus estimates of analysts polled by Visible Alpha.

The drugstore chains said it expects fiscal 2025 adjusted EPS of $1.40 to $1.80, with declines in the U.S. retail pharmacy operations more than offsetting growth in U.S. healthcare and international businesses. Analysts are expecting $1.76, per Visible Alpha.

Walgreens shares have lost almost two-thirds of their value this year through Monday's close.

Do you have a news tip for Investopedia reporters? Please email us at tips@investopedia.com