Walgreens to close about 200 stores as part of new $500 million cost-savings plan.
Walgreens Boots Alliance on Thursday reported quarterly earnings for the first time since the December 2014 merger of Walgreen Co. and Alliance Boots GmbH. The announcement included the news that the drug store retailer will close about 200 U.S. stores as part of its previously announced three-year, $1 billion cost-reduction plan.
The closings translate to roughly 2% of the 8,232 drugstores Walgreens operates in the United States, Puerto Rico and the U.S. Virgin Islands. (The list of stores to be shuttered, as well as their closing dates, has yet to be finalized, according to the Chicago Tribune.)
In addition to the store closings, the company said it plans to reorganize corporate and field operations and streamline its information technology and other functions, resulting in a “faster and more agile” company. Together, the actions are expected to add another $500 million in savings to Walgreens Boots’ cost-cutting plan. The company expects to book pre-tax charges for the restructuring of between $1.6 billion and $1.8 billion in regards to the program.
Net sales for Walgreens Boots in the second quarter, ended Feb. 28, increased 35.5% to $26.6 billion compared with the same quarter a year ago, largely due to the inclusion of Alliance Boots for January and February.
Net sales in the first six months of fiscal 2015 increased 21.6% to $46.1 billion compared to the year-ago period.
The company earned $2.04 billion in the quarter, compared with earnings of $716 million a year ago.
“This quarter marked a solid start for our new company, and I remain as optimistic as ever about our long-term future," stated Stefano Pessina, executive vice chairman and acting CEO, Walgreens Boots Alliance. "At the same time, we understand the work that is needed to proactively address headwinds such as reimbursement pressure and competition."
Walgreens Boots also announced that its board is progressing in its search for a permanent CEO as its search committee works with a top executive recruiting firm.
“While we work through this process in a deliberate and methodical manner to fill such a critical role, we are making the necessary business decisions to move us forward and will continue to do so while we find the right candidate,” said executive chairman Jim Skinner.