Walgreens will be closing over 2,000 stores in the US after it has been hit by inflation and customers cutting down on spending habits. The pharmacy and convenience store chain is looking to turn around its business.
Walgreens CEO Tim Wentworth said during a Thursday earnings call, "The current pharmacy model is not sustainable." Only around 75 percent of the company's stores account for 100 percent of the company's adjusted operating income. In turn, a quarter of its 8,600 stores will be facing closures over the next few years or so. It would result in about 2,150 stores closing their doors, per CBS News.
"Changes are imminent," Wentworth said of the oncoming closures, however, he added, "There's not one exact number." The CEO added that Walgreens will be shutting down stores that are underperforming, but that some locations could be shifted up in their profits as well. With high prices and inflation consumers have been "increasingly selective and price sensitive on their selections." About a month ago, Walgreens cut the prices on 1,300 products to keep up with price drops as the economy showed signs of slowing down along with other retailers.
The company does not expect to have mass layoffs and believes that the employees at those locations shutting down can go to others. "You don't need to have the number of stores we have today," Wentworth said. "Reducing capacity is not a bad thing, from a payer standpoint." He added that the company's "footprint" will remain the same, but with fewer locations in place.
The pharmacy industry itself, aside from Walgreens, is also having a tough time in the US market. In October, Rite Aid made plans to close 154 different stores nationwide as part of a bankruptcy filing. This came as the company was dealing with a drop in sales as well as lawsuits related to opioids.
Since Biden took office, prices of goods on the Consumer Price Index are up around 20 percent on average. The White House, which coined the term "Bidenomics" has used the term less and less in recent months, according to USA Today, and the economy has been one of the top issues for most Americans ahead of the election in November.