(VOR News) – According to a statement that was issued by the pharmacy chain on Tuesday, Walgreens has the intention of closing 1,200 stores over the course of the next three years.
This is a component of the company’s plan to turn things around, which is being implemented in light of the fact that it is facing competition from retail establishments and decreased payouts for prescription payments.
Tim Wentworth, the Chief Executive Officer of the company, has stated that approximately one fourth of the company’s retail stores do not generate a profit.
Walgreens cut one billion dollars in expenditures.
A number of its retail locations have already been shut down, the leadership has been restructured, and the company has been in the process of renegotiating its contracts with insurance companies.
Walgreens, which also owns the Boots pharmacy chain in the United Kingdom, reported a net loss of $3 billion for the most recent quarter when it was reported. This loss was reported for the most recent quarter. This turned out to be significantly better than what was anticipated, with sales increasing by 6% of what was expected.
Walgreens is not the only major pharmacy company that is seeking to make a comeback; other chains are also doing it currently. In order to unwind its mergers with the insurance business Aetna and with Caremark, a pharmacy benefits manager, CVS has also removed stores and is reportedly exploring a separation.
This is being done in order to decommission its operations. One month ago, Rite Aid emerged from the bankruptcy process. CVS is just another firm that has shut down its existing sites.
There have been a variety of merchants, such as Amazon, Walmart, Costco, grocery stores, and dollar stores, that have been luring customers away from the convenience store section of pharmacy networks. Furthermore, a significant number of these competitors also provide prescription filling services, which means that they compete with pharmacies for customers.
Over the course of their history, drugstore chains have overexpanded to thousands of locations, signed long-term leases for pricey corner positions, and increased the number of locations where they operate.
However, several customers have questioned Walgreens’ quality.
These customers have expressed their discontent with the absence of staff and the inaccessibility of items that are locked up to prevent theft. On the other hand, pharmacies have voiced their discontent with the declining earnings that have been brought about by the fulfillment of prescriptions, alleging that there has been a major fall in the rates of reimbursement.
CVS and Walgreens have been looking for possibilities to create profits in other areas as a response to the difficulties they have been experiencing. It is a project that demands a large amount of time and money, and they have endeavored to create primary care centers.
This project is a huge undertaking. Furthermore, the chains have proposed several pricing arrangements for prescriptions, which are worth considering. On Tuesday, Walgreens issued a warning, claiming that it would be “willing to walk away from a line of business if it doesn’t make sense.” Walgreens did not further elaborate on its statement.
Wentworth, the Chief Executive Officer of Walgreens, made the following statement to investors on Tuesday: “I am very confident that within a period of two to three years, we will have reset the framework for reimbursement discussions.”
In addition to that, he added that Walgreens is working on increasing the number of store-brand products that it offers across its whole chain.
The implementation of this strategy has been successful for Boots in the United Kingdom; however, it has not yet been as successful in the United States as it has been in the United Kingdom.
In addition, Wentworth mentioned that the company would make an effort to re-hire staff from stores that will be closing, and he also mentioned that in general, “Many of our actions across this turnaround will take time.”
SOURCE: NPR
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