Why is Walgreens closing hundreds of stores? The reason behind the drugstore downsizing

Walgreens’ corporate management have announced that they would be closing 150 of its nearly 9,000 stores in the United States by the end of August 2024 as profits have declined. In an earnings call the Chief Financial Officer James Kehoe said that earnings sunk from $289 million to $118 million from the year prior in the third quarter.

CEO Rosalind Brewer said that the second-largest retail pharmacy would save $3.3 billion by the end of the year and projected $800 million more in 2024. The company had just completed a restructuring of the organization at its headquarters reducing its corporate staff by 10 percent, eliminating over 500 positions.

The store closures follow a broader trend among other drug store chains, while the reasons are different for each, between Walgreens, CVS and Rite Aid there will be roughly 1,500 fewer locations for customers to visit.

Why is Walgreens closing hundreds of stores? The reason behind the drugstore downsizing

The move to reduce Walgreens’ brick-and-mortar footprint is to accelerate the company’s “portfolio optimization to further simplify the business” according to Kehoe. The drug store chain is carrying out development of a “pharmacy of the future operating model” which it envisions “will drive significant savings.” The ultimate goal is to optimize “the model through our micro fulfillment centers, tech-enabled centralization of in-store activities, and tele-pharmacy solutions.”

“These initiatives will also elevate the role of the pharmacist and improve patient engagement.”

One glitch in this plan is the discontent among its staff, including pharmacists who feel that they are having to deal with harsh working conditions. They are worried that they are being stretched so thin by the demands put upon them that it’s becoming difficult to safely fill prescriptions. In turn raising concerns that they could be putting the health of their customers at risk.

This has led workers at over 500 locations including pharmacists, technicians and support staff, to plan a three-day walkout starting Monday 9 October. Speaking to CNN one pharmacist explained:

“We’re going to do way more harm to people in 10 more years of operating like this than we would with a three-day walkout. It’s time to try something different. Every year we get the same promises and every year we get the same Band-Aid on the problem.”