Walgreens announced plans to shutter 1,200 of its stores over the next three years, with new CEO Tim Wentworth driving an aggressive strategy to overhaul the chain amid growing financial struggles. Hit by low reimbursement rates for prescriptions, a shift in consumer spending patterns, and fierce online competition, Walgreens will close about 500 stores in the coming year, with further cuts to follow by 2027. This decision marks a pivotal effort to stabilize a chain that, with over 8,000 U.S. locations as of last year, faces a declining market for in-person retail.
For Walgreens, this major shake-up comes as part of a $1 billion cost-cutting initiative launched by Wentworth, who has also restructured leadership to accelerate decision-making and efficiency. “This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” Wentworth stated, acknowledging the heavy toll the closures will have on communities dependent on their local Walgreens.
The plan addresses headwinds from what analysts call the “retail apocalypse,” as Walgreens contends with fewer customers willing to buy high-priced essentials in-store, instead hunting for bargains or opting for the convenience of online shopping. As inflation bites, the stock has fallen to a near 30-year low, making Walgreens the worst-performing company on the S&P 500 index with a 65% stock drop this year alone. Comparable retail sales were down 1.7% in the fourth quarter, largely due to sluggish grocery and high-margin product sales—a trend that further underscores consumers’ shift to e-commerce.
Financially, Walgreens beat Wall Street’s tempered expectations with a fourth-quarter profit of 39 cents per share, slightly above the predicted 36 cents. Still, it projects modest gains for fiscal 2025, forecasting adjusted earnings of $1.40 to $1.80 per share, below market estimates of $1.73. Beyond the cost-cutting, Walgreens also recorded impairment charges tied to its investments in CareCentrix, a home care provider, and its equity holdings in China, which affected its year-end bottom line.
In the long run, Wentworth’s vision includes transforming Walgreens into a streamlined, customer-centric chain capable of weathering economic storms and reclaiming market share lost to e-commerce. Whether these cuts will pay off remains to be seen, but as Walgreens braces for the future, the company’s gamble on fewer stores and a leaner structure could set a precedent for other retailers navigating similar pressures.
