Walgreens Boots Alliance Inc (NASDAQ:WBA) To Shut Down 200 Stores In US
Walgreens Boots Alliance Inc (NASDAQ:WBA), the newly branded company, announced that it is on a restructuring phase and will close nearly 200 stores across the U.S. The move comes just months after the retail-chain completed the purchase of drugstore chain, Alliance Boots.
Walgreen Boots claims that the current closure of storefronts is part of an ambitious cost-cutting plan the company hopes to implement to optimize capital flow. The focus is on achieving a target reduction in expenses of $1.5 billion in the next three years. This is much higher than the previous expense cut-back plan it had in place, at $1 billion.
Walgreens Boots Alliance Inc (NASDAQ:WBA), continues to be the largest drugstore chain in the country, in terms of drugstore outlets, over close rival, CVS. The latter continues to hold leadership position in terms of sales over Walgreens.
In recent years, the company has been adding stores at a much higher rate than the number of stores it has closed. At last count, the number of stores that the chain has is 8,232, spread over 50 states. Besides the sheer volume of the stores, it also spent nearly $5.3 billion in the purchase of Alliance Boots. Later, it also purchased, for $1.1 billion, the pharmacies outlet, Duane Reade. The latter continues to be in operation as a separate chain and has 257 stores of its own in the city of New York.
Walgreens Boots Alliance Inc (NASDAQ:WBA)’s store closures are therefore driven by two strategic reasons. At one level, storefronts are threatened by the emergence of online of stores, which meet the demands of consumers in terms of service and at lower prices to boot. This means the footfalls to bric-and-mortar stores continue to fall and the sales revenues remain dismally low, leading eventually to their closure.
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