Major retailer’s ‘insane’ collapse, up to 25% of stores to close

Its CEO revealed the current model isn't “sustainable” and they expect no improvement in the retail environment.

The second largest pharmacy store chain in the United States has revealed it will be forced to close a “significant portion” of its stores as it struggles to survive sparking broader fears for the sector.

Walgreens revealed 25 per cent of its 8600 stores based in 50 states across the US are underperforming and face permanent closure.

“We are at a point where the current pharmacy model is not sustainable and the challenges in our operating environment require we approach the market differently,” Walgreens chief executive Timothy Wentworth said during the company’s quarterly earnings call.

“We do not expect an improvement in the US retail environment.”

Walgreens has announced that it will be closing a "significant" number of underperforming stores in the United States. Picture: Spencer Platt/Getty Images/AFP

The announcement left business experts shocked.

“The collapse of Walgreens has been unlike anything I’ve ever seen in big retail,” said 28-year veteran business journalist Brian Sullivan, who is the anchor for business news channel CNBC.

“It’s down 24 per cent today and has now lost 80 per cent of its value in under five years.

“This is America’s largest pharmacy chain . with over 8500 stores and more than 300,000 employees. Simply insane.”

While employees would be moved to alternative stores, according to the pharmacy giant, there are fears the store closures could plunge more Americans into the risk of living in a pharmacy desert.

Many US pharmacies also sell food which is essential in rural or low income areas across the US.

Walgreens has been haemorrhaging stores with 484 already closed across the US since February, while 2000 locations have been shuttered in the past 10 years.

Walgreens has been haemorrhaging stores with 484 already closed across the US since February. Picture: Stephanie Keith/Bloomberg

Mr Wentworth said cost of living pressures had hit spending with customers “increasingly selective and price-sensitive in their purchases”.

Retail sales for Walgreens had slumped by 4 per cent in the most recent quarter compared to the same time last year.

The entire pharmacy sector in the US is struggling with other chains such as Rite Aid filing for bankruptcy last year having shut down 500 stores, while CVS has closed 300 stores already in 2024.

A huge boost to profits with the sales of Covid testing kits has now slumped, while increased competition, changes to consumer shopping and retail crime have also impacted on the sector.