Walgreens plans US store closures despite higher third-quarter sales

(Source: Wallgreens/Facebook)

Walgreens Boots Alliance is finalizing plans to close underperforming US stores despite higher group sales in the fiscal third quarter, which according to an analyst, represents a loss in market share.

The retail pharmacy chain’s net earnings surged 191.5 per cent year over year to $344 million while sales increased 2.6 per cent to $36.35 billion.

The results included a non-cash impairment of pharmacy license intangible assets in Boots UK.

The company has not disclosed how many stores it will close, however some media outlets have been reporting it could be as many as one in four in some markets.

“An overall revenue uplift of 2.6 per cent may not look unreasonable, but this is running below inflation and, across some segments of the business, represents a loss of market share,” said Neil Saunders, MD at GlobalData.

“Walgreens has been losing front-of-store customers for a while now, and this long-established trend has been exacerbated by the cost-of-living crisis which has seen customers curtailing the volume of products they buy and shopping around more for the best deals and bargains.”

US retail pharmacy sales climbed 2.3 per cent to $28.5 billion while international sales jumped 2.8 per cent to $5.73 billion.

US healthcare sales improved 7.6 per cent to $2.13 billion.

“We continue to face a difficult operating environment, including persistent pressures on the US consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins,” said Tim Wentworth, CEO at Walgreens Boots Alliance.

“Informed by our strategic review, we are focused on improving our core business: retail pharmacy, which is central to the future of healthcare. We are addressing critical issues with urgency and working to unlock opportunities for growth.”

In April, Walmart said it would close all 51 health centers across five states as well as its virtual care due to a lack of profitability amid a challenging reimbursement environment and rising operating costs.

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