Walgreens Tips Cap at Financial Struggles By announcing Closure of 1200 Stores

The struggling Pharmaceutical giant Walgreens announces the closure of 1,200 stores by 2027. Walgreens mentions the store closures are part of a broader strategy to optimize its retail footprint amid challenging market conditions.

 The pharmaceutical giant has been dealing with a decline in revenue since the end of COVID-19, primarily recording losses in revenue due to increasing pressure from inflation, supply chain disruptions, and an overall decline in retail sales.

Revenue Earnings History

During the peak of the pandemic, Walgreens' earnings were significantly boosted by increased demand for healthcare products and COVID-19 testing and vaccinations. For fiscal year 2021, Walgreens Boots Alliance reported a full-year adjusted earnings per share (EPS) of $4.91, up 14.5% from the prior year​.

In 2022, Walgreens experienced a decline in COVID-related revenues as the demand for testing and vaccinations diminished. This led to slower growth in both revenue and earnings compared to the pandemic highs. For the full year, Walgreens adjusted its EPS outlook downwards, reflecting reduced pandemic-driven profits.

Walgreens’ earnings in 2023 continued to face challenges from inflation, weakening consumer demand, and increased competition in the retail pharmacy space. The company launched cost-saving measures, including plans to close a significant number of stores, which were announced as part of a restructuring strategy.

As of 2024, Walgreens reported mixed results, with quarterly earnings falling short of some estimates, but still managing to beat revenue expectations in recent quarters. Adjusted EPS for fiscal year 2024 is projected to be between $2.80 and $2.95, down from earlier estimates of over $3, reflecting ongoing headwinds.

Despite these challenges, Walgreens exceeded earnings expectations in its latest quarter, reporting $37.5 billion in revenue.

Moving Forward

The company aims to refocus on its core retail pharmacy business while executing a cost-saving initiative that includes evaluating underperforming stores.

CEO Tim Wentworth emphasized that the closures are part of a strategic review aimed at boosting long-term profitability, with significant financial benefits expected in the coming years.

This is yet to be seen.