Walgreens Closing 200 Stores by 2017
Deerfield IL based Walgreens has been through some major changes and is, apparently, none the worse for wear. A year ago, Walgreens almost moved to Switzerland. Thwarted by public opinion in that decision, it finalized shop-changing changes including: closing 76 stores; reporting the resignation of CEO Greg Wasson; and – biggest step yet – allying with European health and beauty retailer Alliance Boots.
Three days ago, Walgreens announced another finale: shuttering 200 American stores as part of an expanded cost reduction push. Although these stores amount to only 2 percent of the 8,232 drugstores, Walgreens is dismissing 5000 workers. Fortune concludes that ‘the store closures are fairly minimal’, but those who tally results in terms of human anguish disagree.
Nonetheless – or because of these changes? – Walgreens reported a fiscal second-quarter net income of $2.04 billion last Thursday. The results surpassed Wall Street expectations. Walgreens exulted that:
• Its shares have increased 15 percent since the beginning of the year.
• Stock has climbed 37 percent in the last 12 months.
• Full-year earnings hover $3.45 to $3.65.
• Analysts are forecasting $3.62 per share for the year.
In some regions of the country, individuals are distributing flyers and protesting Walgreen’s closures. Others are claiming that Walgreens rightly acts for self-preservation. The company had, after all, launched 71 new drugstores in the first half of 2015. And closings have become a growing trend in the retail sector as brick-and-mortar stores jostle online outlets. RadioShack, Wet Seal, Staples, Office Depot and Sears are some examples. Others commend Walgreen’s move. The company once estimated that it opened a new store every 17 hours. Now it aims to squeeze revenue out of each and every existent one by muscling up its service.
Take it which way you wish, I cannot help admiring Walgreens’ determination for change and its perseverance.
How about you?
Adam Faust, Founder – Deep Blue Financial