Walgreens stock has worst-ever 1-day fall
Walgreens is finalizing a plan to fix its U.S. business that could result in closing hundreds of additional stores over the next three years.
CEO Tim Wentworth told analysts Thursday morning that “changes are imminent” for about 25% of the company’s stores, which he said were underperforming. The drugstore chain currently runs more than 8,600 in the U.S.
Wentworth said the company’s plan could include the closing of a “significant portion” of those roughly 2,100 underperforming stores if they don’t improve.
Walgreens Boots Alliance Inc. also reported that it missed earnings expectations and cut its forecast.
Shares of the Deerfield, Illinois, company plunged 22% to end Thursday at $12.19, by far the stock’s biggest single-day percentage decline on record. Walgreens’ shares have already shed more than half their value so far this year.
Company leaders said they’ve already closed 2,000 locations over the last 10 years. The company runs about 12,500 drugstores worldwide.
“We are at a point where the current pharmacy model is not sustainable,” Wentworth said.
Walgreens and major competitors like CVS and Rite Aid — which is going through a bankruptcy reorganization — have been closing stores as they adjust to an array of challenges. They include years of tight reimbursement for their prescriptions and rising costs for running their locations.
Plus, analysts say they’ve also been hit by growing competition from Walmart, Amazon and other discount retailers over sales of goods sold outside their store pharmacies.