Walgreens has announced its plans to shut down 200 stores in the U.S, citing restructuring and removing stores that were not meeting sales expectations. The leading drugstore is set to expand on a $1 billion charge-reduction strategy, announced on August 2014.
The company stated that consumers and fans have nothing to worry about. The closure of 200 stores would affect only two percent of company’s locations in the U.S, U.S Virgin Islands and Puerto Rico. The decision is aimed at generating revenue out of the locations and will also allow the company to evaluate the reason for the poor sales,when compared to other stores.
Last year, the company closed 76 stores as a part of three-year cost-reduction plan. However, the possibilities of new stores coming up in other locations are not ruled out. By the end of the 2017 fiscal year, the drugstore hopes to reduce costs by $1.5 billion. Despite the closure, the company is growing with the acquisition of Alliance Boots in 2014, and a European health and beauty retailer was partly acquired.
Alliance Boots was eventually renamed Walgreens Boots Alliance Inc., which has more than 12,800 stores in 11 different countries. Walgreens acting CEO Stefano Pessina stated that evaluating the location of stores would prevent the closure of stores, caused by neglect of issues. She added that of the company closes 10 stores a year, it does not mean that 10 new stores will be opened.
Though Walgreens has plans to shut down 200 stores, the company announced that sales were up by 35 percent from last year and the company is performing well. However, the drugstore profits stood at $26.57 billion, lesser than analysts prediction of $27.73 billion. The company stock so far, has grown by 15 percent this year, as of Wednesday. The closure is also aimed at competing with other leading retailers like Walmart and pharmacies.