‘Retail apocalypse’ forces Walgreens to axe 150 stores by summer 2024

Walgreens is set to shutter 150 stores after slashing its earnings forecast due to lessening demand for Covid-19 tests and vaccine shots. 

Shares in the pharmaceutical chain plummeted to $28.64 on Tuesday – their lowest level in more than 11 years – prompting drastic cost-cutting measures from executives.

Last night the firm confirmed all the closures will take place by the end of August 2024. As of midday Thursday its shares were sitting at $28.59, down 30 percent from last year. 

Walgreens said it had been hit especially hard by the end of the pandemic which saw demand for its Covid-19 vaccine shots and testing facilities decline rapidly. 

It also suggested that consumers were increasingly inflation-weary and less likely to spend. 

Walgreens CEO Rosalind Brewer told investors closures were due to ‘changing market trends’

Walgreens CEO Rosalind Brewer – who was given a $24.7 million signing bonus when she took on the job in February 2021 – told investors in a conference call: ‘We have seen changing market trends that have consumers prioritizing value in response to a more uncertain and challenging economic environment.’

The chain reported a 59 percent profits decline to $118 million in the fiscal third quarter, which ended May 31, reports NBC Bay Area. 

The results mean it is now ramping up its cost-management target from $3.5 billion to $4.1 billion. 

On top of its 150 US store closures, the chain will also axe 300 of its sister brand ‘Boots’ locations in the UK. 

It has around 13,000 stores in total across the US, Europe and Latin America. 

The news prompted shares in its rivals CVS Health and Riteaid to also fall. 

On Thursday CVS health shares were trading at $68.34, down by 26.78 percent in the last year. 

Similarly, Riteaid stocks were trading at $1.54, down by 78 percent over the last year. 

Investment expert Jeff Jonas, who manages the Gabelli Funds portfolio, told Reuters: ‘Very few people are getting either rapid tests or the actual PCR nasal swab tests. That … probably has some impact on CVS and Rite Aid.’

The closures come amidst a widespread ‘retail apocalypse’ which has seen dozens of brands axe their bricks-and-mortar locations that are struggling to keep up with online competitors.

Earlier this year Bed, Bath and Beyond was forced to file for Chapter 11 bankruptcy, resulting in 360 store locations and 20,000 job axes. 

It marked a stark fall from grace for the retailer which was once worth more than $17 billion. Last week the business was snapped up for $21.5 million at auction – though its physical stores will still shutter. 

Similarly, retail chain Party City filed for Chapter 11 bankruptcy protection in January, with dozens of stores across the US already closed for good. 

And David’s Bridal – which once claimed to dress one in every four US brides – similarly filed for Chapter 11 bankruptcy earlier this year.

Earlier this year Bed, Bath and Beyond was forced to file for Chapter 11 bankruptcy, resulting in 360 store locations and 20,000 job axes 

Some retail experts allege that the crisis is being exacerbated by rising crime rates in cities, as thefts are making stores unviable.

The hardest-hit area has been downtown San Francisco where crime has shot up by 15 percent this year – according to figures from the city’s police department. 

The city is also affected by a state-wide shoplifting law that downgraded stealing goods worth less than $950 (£764) from a felony to a far less serious misdemeanor crime.

A disturbing recent report showed 95 retailers in downtown San Francisco have closed since the start of the COVID pandemic, a decline of more than 50 percent.

Out of 203 retailers open in 2019 in the city’s Union Square area, just 107 are still operating, a drop of 47 percent in just a few pandemic-ravaged years.