Walgreens To Close 1,200 Stores Over The Next Three Years
Despite reporting an increase in fourth-quarter sales, Walgreens announced it will close approximately 1,200 stores over the next three years, with 500 stores to shut their doors in 2025.
The additional store closures follow a decision by the drug store chain in June to close 300 locations.
“Fiscal 2025 will be an important rebasing year as we advance our strategy to drive value creation,” said Tim Wentworth, CEO of Walgreens Boots Alliance. “This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term.”
With additional store closures in the offing, Walgreens closed out its fiscal year with fourth-quarter sales of $37.5 billion, an increase of 6% over the comparable quarter the previous year. Fourth quarter operating loss was $978 million, an increase of 117.1% compared to the year-ago quarter. The increase in operating loss reflects a non-cash goodwill impairment charge related to CareCentrix.
Adjusted operating income was $424 million, a decrease of 37.7% on a constant currency basis, reflecting softer U.S. retail and pharmacy performance, lapping the reversal of incentive accruals and prior year sale-leaseback gains, partly offset by cost savings initiatives and improved profitability in the U.S. Healthcare segment.
Net loss in the fourth quarter was $3 billion compared to a net loss of $180 million in the year-ago quarter, primarily driven by a higher operating loss, a $2.3 billion non-cash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods and a non-cash impairment charge related to equity investment in China. Loss per share was $3.48, compared to a loss per share of $0.21 in the year-ago quarter.
Sales in fiscal 2024 were $147.7 billion, an increase of 6.2% from the year-ago period, and an increase of 5.7% on a constant currency basis, reflecting sales growth across all segments.
Operating loss in fiscal 2024 was $14.1 billion, an increase of 104.5% compared to the year-ago period. Operating loss in the current period reflects a $12.4 billion non-cash impairment charge related to VillageMD goodwill, which resulted in a $5.8 billion charge attributable to WBA. Operating loss in the current period also reflects non-cash impairment charges related to certain long-lived assets in the U.S. Retail Pharmacy segment and CareCentrix goodwill.
Adjusted operating income was $2.6 billion, a decrease of 32.6% on a constant currency basis, reflecting a challenging U.S. retail environment, net reimbursement pressure, lower sale-leaseback gains, and lapping the reversal of incentive accruals in the prior year, partly offset by cost savings and improved profitability in the U.S. Healthcare segment.
Net loss in fiscal 2024 was $8.6 billion, an increase of 180.4% compared to the year-ago period.
“Our financial results in the fiscal fourth quarter and full year 2024 reflected our disciplined execution on cost management, working capital initiatives, and capex reduction,” said Wentworth. “In fiscal 2025, we are focusing on stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow, and continuing to address reimbursement models to support dispensing margins and preserve patient access for the future,”
The U.S. Retail Pharmacy segment had fourth quarter sales of $29.5 billion, an increase of 6.5% from the year-ago quarter. Comparable sales increased 8.3% from the year-ago quarter. Pharmacy sales increased 9.6% and comparable pharmacy sales increased 11.7% in the fourth quarter, each driven by higher brand inflation and mix impacts.
Retail sales decreased 3.5% and comparable retail sales decreased 1.7% compared with the year-ago quarter, reflecting a challenging retail environment and continued channel shift. Retail margin was positively impacted by category mix and higher owned brand penetration, partly offset by elevated shrink levels.
