If you use Walgreens as your pharmacy, I have some bad news. The beloved pharmacy chain that has been open since 1901 and has over 8,500 locations nationwide is closing its doors at many of its stores.
The initial plan is to close 500 stores, but it’s actually going to be more than that…
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Walgreens is a retail pharmacy located in thousands of communities across the country. Its major source of income is its pharmacy (offering prescription drugs and vaccinations), as well as selling products like healthcare items and snacks.
Unfortunately, Walgreens is joining many other companies experiencing closures and shutdowns…
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Walgreens experienced a boost in its sales during the pandemic. Vaccines and COVID tests brought in additional income, boosting its annual revenue by 2.5% from 2019 to 2020.
Once things settled down a bit, things didn’t look so great…
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Like many other businesses with closures and shutdowns, Walgreens has hit a rough spot in terms of its profits.
According to Tim Wentworth, CEO of Walgreens, only 75% of the chain’s locations are profitable. What does this mean in terms of closures, and when is it going to happen?
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Walgreens plans to close 1,200 stores in the next three years, with 500 of those closures set to happen this year.
With reports of a $3 billion net loss in the final quarter of 2024, it makes sense why the CEO has decided to start targeting some of its least-profitable stores to keep the rest of the business afloat.
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Walgreens isn’t alone in its struggles. Rite-Aid filed for bankruptcy for the second time within the last year and is closing hundreds of its locations.
CVS is also taking steps to improve profit margins and announced a plan to cut $2 billion in costs, which likely means it will face some closures as well.
Why are retail pharmacies struggling these days? There are a few major reasons.
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Pharmacy benefit managers (PBMs) play a role in how much pharmacies like Walgreens get reimbursed for their prescription drugs. Three of the largest PBMs in the United States handle around 80% of prescriptions nationwide: Caremark, Optum Rx, and Express Scripts.
Pharmacies point the finger at PBMs, accusing them of setting low reimbursement rates. With little room for negotiations, many of these pharmacies have no choice but to take the deals offered by PBMs.
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Consumers are looking more to online pharmacies, which impacts Walgreens’ competition. Amazon rolled out its new online pharmacy through PillPack, and we’re likely to see more online pharmacies as the trend continues.
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In addition to struggles in the pharmacy, Walgreens’ e-commerce sales aren’t doing too well, either. Bigger companies with larger inventories and free shipping (like Amazon) have an advantage over Walgreens’ online selling platform, which sells everything from cleaning supplies to kids’ games.
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Some of the locations of the 500 closing stores have been disclosed. The states where these stores are include California, Illinois, and Georgia.
There are going to be many more states impacted by the closures, but we don’t know the complete list, yet.
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With 500 locations closing just this year and thousands more in the next three years, chances are that you might be impacted in your local community. Some areas losing a Walgreens might not have other pharmacies to turn to, so it could turn into a real problem in more rural communities.
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Do you have a Walgreens in your area? If so, how would you be impacted if it’s closed in the next few years? Share your thoughts in the comments!
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