Walgreens to close 200 stores nationwide

Walgreens will close 200 stores nationwide as part of cost-cutting initiative

Walgreens, the nation's largest drugstore chain, said Thursday it will close about 200 stores nationwide as part of a cost-cutting plan announced in August.

The Deerfield, Ill.-based company said it also plans a corporate reorganization and streamlining of information technology. The cutbacks will take place over three years and are expected to save $1.5 billion by the end of fiscal year 2017.

Walgreens said the changes will create a "faster and more agile company."

Walgreens spokesman Michael Polzin said the company was still finalizing the list of stores and did not have a time frame for when they would be closing. The profitability and lease situations of the stores will determine which are closed, he said.

The closures represent about 2% of the company's 8,232 drugstores, which are located in all 50 states, Washington, D.C., the U.S. Virgin Islands and Puerto Rico.

Walgreens has 638 locations in California.

"I remain as optimistic as ever about our long-term future," acting Chief Executive Stefano Pessina said in a statement. 

Walgreens occupies a competitive niche that includes traditional rivals such as Rite-Aid and Wal-Mart, and new entrant Amazon Dash. The online retailer's new delivery service threatens to cut into the sales and convenience of drugstores, said Faith Popcorn, chief executive of Faith Popcorn’s BrainReserve, a marketing consulting firm.

“What’s coming up is really home delivery,” she said.

Walgreens also reported its fiscal second-quarter earnings Thursday -- the first earnings report since Walgreen Co. acquired European health and beauty company Alliance Boots to create Walgreens Boots Alliance Inc.

Walgreens said it earned $2.04 billion, or $1.93 per share, up from $716 million, or 74 cents, a year earlier before the acquisition was completed. Sales increased 35.5% to $26.6 billion.

Shares of Walgreens Boots Alliance closed up $4.94, or 5.6%, to $92.62.

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Copyright © 2016, Los Angeles Times

UPDATE

1:40 p.m.: This story has been updated with the closing stock price and comment from an analyst.

This story was first published at 10:22 a.m.

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