Walgreens to close some stores here and in the UK

Walgreens Boots Alliance is closing select locations as part of a round of cost-saving initiatives.

The pharmacy and healthcare services company said it expects to close an additional 150 stores in the U.S. and 300 Boots locations in the U.K. as it continues to “optimize” locations and opening hours. (Walgreens operates about 13,000 locations across the U.S., Europe and Latin America. The total includes some 2,200 Boots stores.)

The U.S. stores, whose locations were not revealed, are expected to close by the end of 2024.

“We are accelerating our portfolio optimization to further simplify the business,” said James Kehoe, CFO, who announced the store shutterings on the company’s recent earnings call.

Last week, in its third-quarter earnings release, Walgreens said it was increasing its cost-cutting initiative to $4.1 billion, from its previous target of $3.5 billion. The company is projecting at least $800 million of savings in 2024.

In addition to the closings, other cost-saving efforts include an organization restructuring, which led to the elimination of more than 500 roles, representing around 10% of the company’s corporate and U.S. support office workforce.

In addition, Kehole told investors that Walgreens’ “pharmacy of the future” model is driving significant savings.

“We are optimizing the model through our micro-fulfillment centers tech-enabled centralization of in-store activities and tele-pharmacy solutions,” he said. “These initiatives will also elevate the role of the pharmacist and improve patient engagement.”

Walgreens reported net profit of $118 million for the quarter ended May 31, or $0.14 per share, down from $289 million, or $0.33 per share, in the year-ago quarter. The decline was due primarily to lower operating income, according to the company.

Sales rose 8.6% to $35.42 billion. U.S. retail pharmacy segment sales rose 4.4% to $27.9 billion. Comparable sales rose 7%. Pharmacy sales increased 6.3%.

Walgreens reduced its outlook amid uncertainty in consumer spending and diminished demand for COVID-related products and services.

“We had called out COVID as a wildcard heading into the quarter and have unfortunately seen less patient willingness to vaccinate,” CEO Roz Brewer told analysts on the earnings call.