Walgreens is closing several Southern California stores as part of its strategy to navigate regulatory challenges and streamline operations.
Quick Takes
- Five pharmacy locations in Southern California will close by late March.
- Closures due to increased regulatory and reimbursement pressures.
- Part of a broader “footprint optimization program” planning to reduce locations by 1,200.
- Impact expects to affect at least 93 employees, with redeployment efforts underway.
Permanent Closures in Southern California
Walgreens will permanently shut down five pharmacy stores in Southern California by the end of March. Affected locations include Whittier, Los Angeles, Orange, Placentia, and Stanton as part of efforts to streamline operations amid increased regulatory and reimbursement pressures, impacting costs of rent, staffing, and supplies.
“Increased regulatory and reimbursement pressures impacting the ability to cover rent, staffing, and supply costs played into the pharmacy store chain’s decision to shutter the locations.” – Walgreens
Footprint Optimization Strategy
These closures are part of Walgreens’ “footprint optimization program,” aiming to close approximately 1,200 locations over three years. The plan also states that 500 of those closures will occur within fiscal 2025. This aggressive strategy comes as the company reported a first-quarter sales figure of $39.46 billion. Despite sales figures, Walgreens incurred a net loss of $265 million, equivalent to 31 cents per share.
“When closures are necessary, like those here in California, we will work in partnership with community stakeholders to minimize customer disruptions.” – Marty Maloney
Walgreens is making efforts to mitigate customer disruption by working with community stakeholders. At least 93 jobs are expected to be impacted, but the company plans to redeploy affected employees to other stores when possible. These positions span roles such as pharmacy technicians, pharmacists, cashiers, customer service associates, store managers, and inventory specialists.
Stabilizing a Vital Business
Walgreens’ CEO Tim Wentworth emphasizes the importance of stabilizing the U.S. retail pharmacy business in the turnaround strategy. The current store closures reflect less impact on customer service than the company’s retained stores, which are showing better performance metrics.
Walgreens, alongside other drugstore operators, faces challenges from changing consumer habits and financial burdens from opioid settlements post-pandemic. Rite Aid has also taken similar actions by closing 31 stores in California as part of a bankruptcy restructuring plan in response to declining sales and opioid-related lawsuits.
Sources
1. Walgreens closing stores in Whittier, downtown L.A.
2. Walgreens permanently closing some stores in Southern California
