Inside This Issue - News
Walgreens to shutter 76 stores
April 7th, 2014
DEERFIELD, Ill. – In an effort to optimize its store base and cut costs, Walgreen Co. plans to close 76 unprofitable outlets between now and August.
The store closings expected to boost earnings before interest and taxes by $40 million to $50 million a year beginning in fiscal 2015, Walgreens chief executive officer Greg Wasson said in a second quarter conference call.
“We looked at several factors in deciding which stores to close,” Wasson said. “We address the impact of increased density from our own stores, the impact of real estate positioning within the market and material changes to a store’s trade area.
“In total, this represents a very small portion — less than 1% — of our 8,200-plus store base. As we position for future growth and markets and as communities continue to change, we want to optimize our store footprint and make sure our stores remain on the best corners in America.”
Most of the stores set for closure, Wasson added, are located near other Walgreens stores, and most of the affected employees will be reassigned.
At presstime, Walgreens said it would not release the locations of the stores that are to be shuttered until the employees have been notified.
Even with the closures, Walgreens expects to boost its store count by 55 to 75 in the current fiscal year. Wasson said the company also intends to boost its number of in-store health care clinics by nearly 100 during the current calendar year. The retailer currently operates about 400 such clinics.
The announcement of the store closures came as Walgreens reported its second quarter results, which included a 5.1% increase in sales, to $19.6 billion.
“This quarter was marked by a solid top-line growth in performance," Wasson said. "We achieved record quarterly sales and record second quarter prescriptions filled in spite of continued headwinds from slower generic drug introductions and severe weather.”
Net earnings for the second quarter were $754 million, down slightly from the $756 million in the year-ago quarter. Profits were hurt by severe weather and a weaker cold and flu season, as well as by fewer generic drug introductions.