Walgreens to close 600 stores following Rite Aid buy
Walgreens Boots Alliance expects to shutter about 600 stores in the wake of its purchase of 1,932 stores from rival Rite Aid.
The closings will start next year and take place over 18 months, Walgreens CFO George Fairweather said on the chain's quarterly earnings call. The stores marked for closing will mostly be Rite Aid locations. The retailer expects to close stores within a mile of another Walgreens or Rite Aid location.
In September, Walgreens won regulatory approval to buy 1,932 stores and three distribution centers from Rite Aid for $4.38 billion.
In its quarterly earnings report released Wednesday, Walgreens said the first few Rite Aid locations have been acquired in the past week. Ownership of the remaining stores is expected to be transferred in phases and be completed by spring 2018.
Walgreens expects to complete the integration of the acquired stores and related assets within the next three years for an estimated cost of approximately $750 million, which will be reported as acquisition-related costs. The company also plans to spend approximately $500 million of capital on store conversions and related activities.
For its fourth quarter ended Aug.31, Walgreens' earnings dropped 22% to $802 million. Earnings were impacted by more than $300 million in termination fees and costs related to the company’s decision to call off it acquisition of Rite Aid. Excluding one-time items, Walgreens reported adjusted earnings of $1.31 per share. Analysts expected earnings of $1.22 per share.
Total revenue rose 5.3% to a better-tjan-expected $30.15 billion. Same-store sales rose 3%. Sales in Walgreens’ U.S. retail pharmacy division’s sales rose 7.5% to $22.3 billion; same-store rose 3.1%.
Pharmacy sales, which made up 72.1% of the division’s sales in the quarter, increased 12.6%, primarily due to higher prescription volumes and its new combined specialty pharmacy and mail services company, AllianceRx Walgreens Prime. Retail sales fell 3.9%, with same-store sales down 2.1%.
For commentary on Walgreens results, click here.
The closings will start next year and take place over 18 months, Walgreens CFO George Fairweather said on the chain's quarterly earnings call. The stores marked for closing will mostly be Rite Aid locations. The retailer expects to close stores within a mile of another Walgreens or Rite Aid location.
In September, Walgreens won regulatory approval to buy 1,932 stores and three distribution centers from Rite Aid for $4.38 billion.
In its quarterly earnings report released Wednesday, Walgreens said the first few Rite Aid locations have been acquired in the past week. Ownership of the remaining stores is expected to be transferred in phases and be completed by spring 2018.
Walgreens expects to complete the integration of the acquired stores and related assets within the next three years for an estimated cost of approximately $750 million, which will be reported as acquisition-related costs. The company also plans to spend approximately $500 million of capital on store conversions and related activities.
For its fourth quarter ended Aug.31, Walgreens' earnings dropped 22% to $802 million. Earnings were impacted by more than $300 million in termination fees and costs related to the company’s decision to call off it acquisition of Rite Aid. Excluding one-time items, Walgreens reported adjusted earnings of $1.31 per share. Analysts expected earnings of $1.22 per share.
Total revenue rose 5.3% to a better-tjan-expected $30.15 billion. Same-store sales rose 3%. Sales in Walgreens’ U.S. retail pharmacy division’s sales rose 7.5% to $22.3 billion; same-store rose 3.1%.
Pharmacy sales, which made up 72.1% of the division’s sales in the quarter, increased 12.6%, primarily due to higher prescription volumes and its new combined specialty pharmacy and mail services company, AllianceRx Walgreens Prime. Retail sales fell 3.9%, with same-store sales down 2.1%.
For commentary on Walgreens results, click here.