Walgreens: Shutting Down Stores to Boost Earnings

Walgreens, a well-known drugstore chain, has decided to close 1,200 stores over the next three years. This strategic move is part of the company's efforts to save money and improve its bottom line. Among these closures, 500 stores will shut down by the end of 2025. The company believes this will help them make more money and have more free cash flow. Walgreens currently has around 8,700 stores in the U.S., and a quarter of these are not making any profit. The company's shares saw a 6% increase in morning trading after they announced these closures. This announcement wraps up a challenging year for Walgreens. They've been dealing with issues like reduced payments for pharmacies, less spending by customers, and struggles in their primary care services.

However, the company reported that they managed to cut $1 billion in costs during the past year. This includes closing unsuccessful stores, letting go of employees, and using artificial intelligence to make their supply chain more efficient. In June, Walgreens had hinted at closing many underperforming stores by 2027. The latest news gives a clearer picture of how many stores will be shut down. For the quarter that ended on August 31, Walgreens made $37.55 billion in sales, which is 6% more than the same time last year. They also reported a loss of $3 billion, or $3.48 per share, due to a valuation allowance related to opioid settlements. Earnings per share were 39 cents, adjusted, compared to the expected 36 cents. Revenue was $37.55 billion, exceeding the expected $35.76 billion.

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