Drugstore giant Walgreens said Thursday (April 9) it plans to shutter about 200 stores or 2% of its U.S. footprint as part of a $1 billion cost savings plan over the next three years.
Walgreens operates about 8,232 stores in the U.S., a base it has been expanding rapidly to the tune of 500 new stores annually over the past decade. This shift in strategy comes on the heels of the $16 billion purchase of Alliance Boots last year. Alliance Boots operates the largest pharmacy chain in the United Kingdom. The company said no closures are slated for this European business unit.
The company hasn't finalized the list of the U.S. stores it will close, but Walgreen Co. President Alex Gourlay told analysts it was looking at locations where the population seemed to be moving away.
"This really is just getting the right stores in the right places," he said.
Walgreens also said it will reorganize its corporate operations and streamline its information technology and other functions. It expects these moves to add $500 million to its cost reduction goal.
The news was reported during the company's earnings call on Thursday in which the drugstore chain earned $2.04 billion, or $1.93 per share, in its fiscal second quarter.
Earnings, adjusted for one-time gains and costs, were $1.18 per share, which beat analyst expectations. Walgreens also announced a forecast for full-year earnings in the range of $3.45 to $3.65 per share.