A number of Walgreens are set to close because the stores are struggling to turn profits, leaders at the pharmaceutical giant announced this week.
Tim Wentworth, the company’s chief executive, confirmed the news during a conference call with industry analysts on Thursday. He said a “significant portion” of struggling locations will shut their doors.
There are 8,500 Walgreens stores across the country, and around a quarter are failing, Wentworth said. It’s not clear how many stores will close, ABC News reported, but at least some of the struggling stores will stay open and be refurbished.
As the company undergoes changes, Wentworth said that a priority will be to minimize layoffs. About 240,000 people work for Walgreens, and in 2021, the company raised its minimum wage to $15 an hour.
The company began a review of its business practices seven months ago. “Everything has been on the table,” Wentworth said. “We are at a point where the current pharmacy model is unsustainable.”
Walgreens has experienced a slight increase in revenue compared to this time last year, reporting $28.5bn over three months ending in May. Still, the figure was lower than expectated.
Company leaders said inflation was a contributing factor to why the company wasn’t hitting it financial goals. “Our customers have become increasingly selective and price-sensitive in their purchases,” Wentworth said.
Walgreens has followed other retailers and has slashed prices to boost revenue. While the discounts have been successful in bringing more customers through the doors, they haven’t helped boost profit margins, however. The company has lowered expectations for the next financial quarter.
Wentworth said he was optimistic about the changes coming to the retailer.
“I’m at Walgreens today because I believe in the future of retail pharmacy and particularly our future,” he said. “Human-to-human interaction is an imperative in healthcare and the core foundation of our business.”
