Walgreens Set to Close 1,200 Stores

Drugstores continue to rethink their business model.

October 16, 2024

Walgreens will close about 1,200 locations over the next three years as the drugstore chain seeks to turnaround a struggling U.S. business, reported the Associated Press.

In June, Walgreens previewed the move, saying it may close hundreds of stores.

“The company said Tuesday that about 500 stores will close in the current fiscal year. … Walgreens will prioritize poor-performing stores where the property is owned by the company, or where leases are expiring,” according to the AP.

Walgreens operates about 8,500 stores in the United States and a few thousand overseas. All the stores that will be closed are in the United States.

Chief Executive Tim Wentworth said about a quarter of the company’s stores are unprofitable. According to NPR, “CVS and Walgreens are facing tough competition from pharmacies that don’t depend as much on profits from prescriptions because they’re part of retail giants, including Walmart and Costco. The drugstore chains also have spent millions of dollars on government fines over allegations of unsafe staffing levels, overbilling government insurance programs, and contributing to the opioid epidemic.”

Even the Walgreens stores that are performing well are not immune to broader challenges facing traditional drugstore chains, such as intensifying pressure from online outlets and dollar stores, said Neil Saunders, managing director of consulting and data analysis firm GlobalData.

According to Saunders, drugstores “have really shot themselves in the foot” because they no longer have a clear way to differentiate themselves from other retailers. “When you want to get the big bucks from consumers, you have to be a destination for something,” he said.

Walgreens “has struggled for years with tight reimbursement for the prescriptions it sells as well as the rising costs of operating stores,” according to AP.

CVS is also closing stores while Rite Aid emerged from bankruptcy protection this year.

Other businesses which have seen closings recently includes True Value, a 75-year-old hardware store brand. CNN reported that True Value has filed for bankruptcy and is selling substantially all its operations to a rival.

In a press release, True Value said it will continue day-to-day operations of selling to its 4,500 independently operated locations during the Chapter 11 process.

True Value said its stores will remain open, because they are not part of the bankruptcy proceedings. In bankruptcy court filings, True Value said it faces a significant cash crunch as the housing market stalled and consumers have become far pickier about discretionary purchases like hardware.

“Bigger rivals like Home Depot and Lowe’s have also been in a yearslong slump since the pandemic boom, but they remain in a significantly stronger financial situation than True Value,” according to CNN.