How Many Walgreens Stores Are Closing in the US?

Key Takeaways

• Walgreens plans to close approximately 1,200 stores across the U.S. by 2027.

• About 13% of Walgreens' total 8,500 locations nationwide are affected.

• The closure plan will start in fiscal year 2025 with 500 stores.

• Targeted closures involve stores identified as unprofitable, accounting for 25% of locations.

• This decision is part of a strategy to streamline operations and enhance profitability.

Overview of Store Closures

In response to financial pressures and a shifting retail environment, Walgreens has announced a strategic decision to close approximately 1,200 stores across the United States by 2027. This plan marks a significant reduction in its physical presence, representing about 13% of its current total of roughly 8,500 locations nationwide. The closures are set to begin in fiscal year 2025, with the first wave including around 500 stores. This decision highlights a broader trend within the retail pharmacy sector, where many drugstore chains are facing similar challenges.

The stores targeted for closure are primarily those identified as unprofitable, accounting for about 25% of all Walgreens locations. These stores have been deemed non-essential to the company’s long-term strategic plan. This move aims to streamline operations and focus resources on more profitable areas, potentially improving overall financial health and responsiveness to market demands. By consolidating its store footprint, Walgreens seeks to enhance operational efficiency and better align its business model with the evolving demands of the retail landscape.

Reasons Behind the Closures

Understanding the reasons behind Walgreens' decision to close approximately 1,200 stores reveals a complex interplay of market forces and internal financial pressures. The primary catalyst for these closures is the company's need to address declining profits and mitigate ongoing financial challenges. A significant portion of the closures targets underperforming stores that are not integral to Walgreens' strategic future. These locations have been identified through a rigorous assessment process, highlighting their inability to contribute positively to the company's bottom line.

The financial predicament facing Walgreens has been exacerbated by a steep net loss exceeding $3 billion in the fourth quarter of 2024, compelling the company to reevaluate its operational strategies. This downturn reflects broader issues within the retail sector, including intense competition from both online platforms and traditional brick-and-mortar rivals. Additionally, operational hurdles such as decreasing drug reimbursement rates and escalating costs have further strained profitability.

The decision to close these stores is part of a broader effort to streamline operations, focus on more profitable locations, and recalibrate the company's presence in the highly competitive retail market. This strategic realignment is crucial for Walgreens to maintain its market position and ensure long-term financial health.

Impact on Employees and Customers

As Walgreens proceeds with the closure of approximately 1,200 stores across the United States, the impact on employees and customers is expected to be significant. For the workforce, the store closures signal a period of considerable uncertainty. Many employees will face job losses, and finding new employment opportunities could be challenging, especially in areas with limited job markets. The disruption to career trajectories and the potential loss of a stable income are primary concerns for the staff.

Customers, on the other hand, will face challenges in accessing essential pharmacy services. With fewer Walgreens locations, some individuals may need to travel greater distances to find an alternative store, which can be particularly burdensome for those with limited mobility or those in rural areas. This reduction in access may lead to delays in obtaining necessary medications, potentially impacting health outcomes. Moreover, the closures raise concerns within communities regarding the availability of pharmacy services that many depend on for their daily health needs. As these stores shut their doors, the fabric of the communities they served will undoubtedly be altered, leaving a gap that may not be easily filled by other retailers or pharmacies.

Future of Walgreens

What does the future hold for Walgreens amidst significant store closures and strategic realignments? As the company plans to close approximately 1,200 stores by 2027, it is clearly navigating a transformative phase aimed at stabilizing its financial position while adapting to new market realities. This strategy, which primarily targets underperforming locations, is a core component of its broader goal to become more resilient and competitively positioned in the healthcare and retail sectors.

To paint a clearer picture of what lies ahead for Walgreens, consider the following key points:

• Focus on Profitable Locations: Enhancing the performance and customer experience at profitable stores.

• Cost-Cutting Initiatives: Implementing a $1 billion cost-cutting program to address financial challenges.

• Strategic Realignment: Streamlining operations to improve overall efficiency and market responsiveness.

• Continuous Performance Evaluation: Ongoing assessments of store profitability to guide future closures or transformations.

• Adaptation to Market Conditions: Adjusting business strategies to align with evolving consumer behaviors and market demands.

Comparing Other Major Closures

While Walgreens plans a significant reduction in its store count, it is not alone in navigating the shifts in retail dynamics. Other major players in the retail pharmacy sector are also undergoing substantial restructuring. For instance, CVS Health Corp has announced the closure of 900 stores over three years as part of its strategic realignment to enhance operational efficiency and consumer reach. This move mirrors Walgreens' strategy to optimize its network in response to changing consumer preferences and economic pressures.

Similarly, Rite Aid Corp has faced its own challenges, recently emerging from bankruptcy, which led to the closure of hundreds of its locations. This reflects a broader trend within the retail pharmacy industry toward consolidation and adaptation to new market realities.

Outside the pharmacy sector, this trend extends to other retail chains. Notably, True Value and Bed Bath & Beyond are closing many outlets, while nearly 450 7-Eleven stores and 100 Big Lots locations are also slated to shut in 2024. These closures across various retail brands underscore the pervasive nature of the challenges facing retailers today, highlighting a shift toward more streamlined operations and increased reliance on digital platforms.