Walgreens will close 1,200 locations over the next three years, the company said in its Oct. 15 fiscal fourth-quarter earnings report.
Here are 10 things ASCs need to know:
1. The closures include 500 in 2025, which should immediately support adjusted earnings and free cash flow. It also includes 300 of the store closures that had been approved under a previous cost-cutting plan.
2. Walgreens saw an operating loss of $978 million in the fourth quarter of 2024, a 117.1% increase compared to the same period last year. Net loss was $3 billion, compared to a $180 million net loss in the fourth quarter of 2023.
3. The company saw $147.7 billion in sales in fiscal year 2024, a 6.2% increase from the previous year. It had an operating loss of $14.1 billion for fiscal year 2024, a 104.5% increase compared to the previous year.
4. In an earnings call on Oct. 15 transcribed by Seeking Alpha, Walgreens Boots Alliance CEO Tim Wentworth said the closures will give the company a "healthier store base" and "will enable us to respond to shifts in consumer behavior and buying preferences."
5. Walgreens surpassed its target of cutting $1 billion in costs during fiscal 2024, according to the release, which included shuttering stores, laying off employees and using AI to make its supply chain more efficient.
6. Mr. Wentworth added the company plans to employ the majority of the workforce affected by the closures, though it is unclear how many employees stand to lose their jobs.
7. In June, Walgreens Boots Alliance finalized its turnaround plan to close underperforming stores and reduce its stake in primary care chain VillageMD, which it acquired in 2021 through a $5.2 billion deal.
8. VillageMD also plans to pull out of several states in 2024, including Illinois, Indiana, Florida and Nevada. To that end, it closed six clinics in Illinois, 40 in Florida, 12 in Indiana and six in Nevada are set to close by the end of the year. Additionally, VillageMD also sold 11 clinics in Rhode Island to Boston-based management company Arches Medical Partners in March.
9. Fiscal year 2025 will be a key "rebasing year" for the company, Walgreens Boots Alliance CEO Tim Wentworth said Oct. 15.
10. In a fiscal third-quarter earnings call, Mr. Wentworth told investors that customer demographics and preferences have shifted, "and we need to reposition and operate our stores accordingly," adding that 75% of the company's roughly 8,700 stores are responsible for nearly all of its retail profits.