Walgreens to Close 150 Stores

Walgreens Boots Alliance is planning to close 150 Walgreens stores in the US and 300 Boots stores in the UK as part of an expanded cost-cutting effort expected to yield $800M in savings in 2024.

In a call with investors on June 27, James Kehoe, CFO of the Deerfield, IL-based multinational—parent of Walgreens and its UK twin, Boots—said the company also had eliminated 500 positions, about 10% of its corporate and US support office workforce.

In the third quarter of its fiscal year, Walgreens reported year-over-year net earnings have declined nearly 60%, due primarily to lower operating income, which the retailer attributed to uncertainty in consumer spending and lower demand for COVID-19 related services like vaccines and tests.

“Our performance in the third quarter did not meet our overall expectations,” Walgreens CEO Roz Brewer said on the earnings call. “We had called out COVID as a wildcard heading into the quarter and have unfortunately seen less patient willingness to vaccinate.”

The company reported that Walgreens administered 800,000 COVID-19 vaccines in the quarter, down 83% year over year, with testing down by a similar amount, RetailDive reported.

Top-line revenue expanded to $35.4% in the quarter, a YOY increase of 9%, due to Walgreen’s rapidly expanding U.S. Healthcare segment. US Healthcare grew 22% YOY on a pro-forma basis to $2B in revenue.

However, U.S. Healthcare reported an adjusted operating loss of $172M. Brewer said the U.S. Healthcare acquisitions of Village MD, an urgent care provider, CareCentrix, a home-care provider, and specialty pharmacy Shields Health Solutions would take more time to achieve profitability.

John Driscoll, president of U.S. Healthcare, said during the call that the company attributed the operating loss to investments in new clinic expansions for VillageMD and fewer visits to CityMD, an urgent care provider VillageMD acquired as part of its $8.9B acquisition in November of CityMD’s parent, Summit Health Care.

As part of the deal with Summit Health, CityMD facilities were merged into VillageMD’s portfolio. Cigna’s health services division Evernorth acquired a minority stake in VillageMD as part of the deal, with Walgreens retaining the majority stake.

Driscoll echoed Brewer, telling investors during the earnings call that 2023 was intended to be a transition year for U.S. Healthcare as it absorbs the recent acquisitions, admitting that the company is “disappointed with the pace.”

Last fall, retailers Walgreens, Walmart and CVS each separately launched a clinical trials unit. With CVS deciding to close its clinical trials business earlier this year, Walgreens said it would continue to grow its clinical trial unit, which has signed eight contracts to date.