Walgreens has announced the plan to close 1,200 U.S. locations over the next three years, including approximately 500 in fiscal 2025.
Walgreens operates over 8,500 retail locations across the country, and these closures include the 300 previously approved through the Cost Management Program. The closures are to support adjusted earnings and free cash flow immediately, according to a release from the company.
The retail drugstore chain has been vocal about the changes needed throughout the company to control operating costs while improving the cash flow.
According to the report, the forward-thinking remarks focused on the impacts on operations and financial results of the company’s “ability to successfully turn around the business and return to growth” from variables including inflation, high interest rates, labor shortages, supply chain disruptions, and pandemics like COVID-19, among other things.
“Our financial results in the fiscal fourth quarter and full year 2024 reflected our disciplined execution on cost management, working capital initiatives, and capex reduction,” Tim Wentworth, chief executive officer of Walgreens Boots Alliance, said in the release.
Walgreens’ net loss in the fourth quarter was $3 billion or $3.48 per share, compared to $180 million or 21 cents a share in the year-ago period.
Wentworth said, “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.”
The company said in the report that the net loss was due to a higher operating loss, a $2.3 billion noncash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods, and a noncash impairment charge related to equity investment in China.
The 2025 fiscal year began Sept. 1.
Wentworth said the 2025 fiscal year is an “important rebasing year as we advance our strategy to drive value creation,” saying the turnaround will take time. Still, the company is confident it will yield significant financial and consumer benefits over the long term.
The report included a $1.9 billion net debt reduction in fiscal 2024 and a $1.2 billion reduction in lease obligations.
This news comes after Rite Aid, a full-service pharmacy, announced the completion of its Chapter 11 bankruptcy last month and the elimination of approximately $2 billion of total debt.
