Walgreens recently announced plans to close approximately 1,200 U.S. shops over the next three years in an effort to combat the ongoing struggles it faces in the U.S. market. The decision was made in an effort to turn around the company’s quarterly losses, which amounted to $3 billion, due to poor operations. The closure plan signals that Walgreens is in the midst of a deep business restructuring to adapt to the rapidly changing retail environment.
Closure plans and financial performance
According to the latest report of the Associated Press, Walgreens announced its closure plans at the same time it released quarterly results that exceeded market expectations. The company’s stock price rose following the news, indicating that investors are optimistic about this transformation plan. Walgreens said it plans to close about 500 shops during the current fiscal year, a decision that is expected to have an immediate positive impact on the company’s earnings and free cash flow. However, Walgreens did not disclose the location or list of specific shop closures.
CEO Tim Wentworth emphasised during the earnings call that the first round of closures will focus on underperforming shops in the second half of the fiscal year, particularly those owned directly by the company or whose leases are expiring. He noted, ‘Our goal is to prioritise the closure of those underperforming shops so that we can allocate our resources more effectively in the future.’
Industry background and competitive pressures
Walgreens currently operates approximately 8,500 shops in the United States, of which approximately 6,000 are profitable. Wentworth emphasised that this profitable base provides solid support for the company’s future growth. He said, ‘Our confidence in the dominant retail pharmacy model remains unchanged, and we will continue to invest in profitable shops to adapt to changing consumer behaviour and purchasing patterns.’
The strategic shift is not an isolated incident, but reflects the challenges facing the industry as a whole. Walgreens rival CVS Health Corp. is also closing about 900 shops, while another chain, Rite Aid, has reduced its shop count to about 1,300 after filing for bankruptcy protection this year. Traditional pharmacies are facing competitive pressure from online and discount retailers, which, combined with declining compensation from drug sales, has led to rising operating costs.

Concerns over pharmacy deserts
Neil Saunders, managing director of Global Data Consulting, has expressed concern about Walgreens’ closure plans, arguing that even well-performing shops will struggle to escape the challenges of the overall market. He noted, ‘All of these factors could weaken shop performance, and Walgreens needs to make sure that doesn’t happen. If it can’t, the latest batch of shop closures won’t be the last, and the company will be stuck in a dangerous cycle of ever-shrinking operations.’
In addition, Walgreens is phasing out plans to open primary care clinics next to some of its shops. The programme, which was initially led by former CEO Rosalind Brewer, was designed to attract customers by offering more healthcare services. However, the programme failed to deliver the desired results, further increasing the pressure on the company as it transformed its business.
Saunders also mentioned that the shop closures would raise public concerns about ‘pharmacy deserts,’ especially in areas where residents may face difficulties in accessing medicines and healthcare services. He said: ‘If the pace of pharmacy closures continues to accelerate, some areas of the United States may experience a lack of pharmacy services. This will not only affect residents’ daily lives, but could also lead to broader health issues.’
Overall, Walgreens’ closure plans and market adjustments once again highlight the significant challenges facing the traditional retail sector amidst digitalisation and changing consumer trends. How the company adapts its strategy to this change in the future will be key to seeing if it can successfully transform itself. Walgreens’ fortunes will have a direct impact on its position in the retail pharmaceutical market, and how to find new growth in an increasingly competitive environment will be an important issue that the company’s management will need to face urgently.
In the coming days, Walgreens’ decision-making will be highly scrutinised, especially on how to effectively integrate resources, enhance customer experience and explore more innovative business models in the new retail environment. As the industry continues to evolve, the effectiveness of Walgreens’ strategy implementation will provide an important reference point for its future direction.