Walgreens Boots Alliance Inc (NASDAQ:WBA) announced on Tuesday that it plans to close down about 200 of its retail outlets across the U.S as part of a restructuring and cost-cutting effort.
The company revealed on Tuesday that it will shut down 200 outlets in the U.S to keep up with the changing consumer habits. Walgreens also noted that the changes were part of a restructuring that will help attract more customers.
“One of the reasons why they’re closing stores right now is to better position themselves for the future,” stated Brian Owens, a senior retail executive at a consulting company called Kantar.
Owens also added that Walgreens focused on the distribution of medication in the past. However, the focus is now shifting towards the customer rather than medicine dispensation. This also means that the company has to come up with a different strategy that will allow it to put the customer first.
Although 200 hundred stores sounds like a huge number, it is just a small fraction considering that Walgreens has about 10,000 outlets in the U.S. This means that the company will still have a large number of stores operating in the country. Walgreens had announced earlier this year that it would shut down 200 UK-based stores.
The closure of the 200 stores will also help Walgreens to cut costs by a noteworthy margin
Walgreens also revealed that the closure of the 200 stores in the U.S will help save about $1.5 billion every year by 2022. The store closure is part of the company’s program called transformational cost management. The company revealed in a regulatory filing that it expects the earnings-related to severance, real estate and other costs to be between $1.9 billion and $2.4 billion.
The company revealed in a statement that the transformative cost management program is aimed at transforming Walgreens’ business so that facilitate investment in key growth areas. The firm believes that this move will help achieve higher operational efficiencies.
Walgreen’s announcement about closing down the 200 U.S stores is the largest closure that the company has announced since 2015.