Walgreens is facing tough times in an economy shaped by current federal policies.
On June 21, the company unveiled plans to close numerous stores, a move that speaks volumes about the challenges businesses are confronting.
The announcement came alongside disappointing fiscal third-quarter earnings, sending Walgreens’ stock into a nosedive. Shares plummeted over 20% on Thursday, reflecting investor unease about the company’s future.
Walgreens CEO Tim Wentworth didn’t mince words during an investor call. “The current pharmacy model is not sustainable,” he stated, signaling the need for major changes in how the company operates.
The collapse of #walgreens has been unlike anything I've ever seen in big retail.
It's down 24% today and has now lost 80% of its value in under 5 years.
This is America's largest pharmacy chain .. with over 8,500 stores & more than 300,000 employees.
Simply insane. pic.twitter.com/alOmhLWKkO
— Brian Sullivan (@SullyCNBC) June 27, 2024
Wentworth’s comments shed light on how economic policies are affecting consumer behavior.
“We assumed … in the second half that the consumer would get somewhat stronger,” he explained, “but that is not the case.” This miscalculation points to overly optimistic predictions about economic recovery.
The CEO also highlighted ongoing consumer struggles. “The consumer is absolutely stunned by the absolute prices of things,” Wentworth noted, suggesting that even when inflation slows, shoppers remain wary of high prices.
While the exact number of store closures remains unclear, the potential scale is significant.
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Only 75% of Walgreens’ stores generate all of its adjusted operating income. If the company shuts down the underperforming 25%, it could mean closing around 2,150 locations.
