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Boots will close 300 stores in the UK and 150 Walgreens branches in the US next year as parent company Walgreens Boots Alliance looks to “optimize” locations.
James Kehoe, executive vice president and head of global finance, confirmed the closing during an earnings call with analysts on Tuesday.
“As you have seen, we are accelerating our portfolio optimization to further ease of doing business,” he added.
The decision was announced after the pharmacy group slashed its earnings forecast for the year amid weak demand for Covid-related products and said consumers were more “cautious and value-driven”.
It also raised its cost-savings target after missing third-quarter profit expectations, causing shares to fall 9 percent to $28.64 in afternoon trading — the lowest in more than 11 years.
“Like other retailers, we have been affected by a rapidly softening macro environment and a more cautious and value-driven consumer,” Walgreens Chief Executive Rosalind Brewer said on its conference call.
It reported a 0.2 per cent decline in same-store sales in its retail division, compared with a 2.1 per cent growth forecast after lower demand for Covid-19 tests and vaccines. However, same-store sales at its pharmacies rose 9.8 percent to 8.8 percent, partly due to higher prices.
Walgreens now expects adjusted earnings per share of $4.00 to $4.05 in 2023, up from $4.45 to $4.65 previously. Profit fell 59 percent to $118 million in the May 31 quarter but sales rose 8.6 percent to $35.4 billion.
The latest round of shutdowns in the US comes after the company said it would close another 200 sites in 2019.
In the UK, Boots said it would continue to refurbish and consolidate stores located close to each other over the next year. No redundancies have been proposed and all affected employees will be offered work in nearby stores.
A year earlier, Walgreens abandoned plans to sell the boots, which were expected to bring in billions of dollars, blaming volatility in the financial markets.
Most closing boot sites are located within 5 km from each other, with customers living within a 10-minute drive from most outlets. 1,900 branches will be dropped across the UK.
The move, Chen said, will allow the retailer to “concentrate its team members where they are needed and focus more on investing in individual stores”.
Despite high-profile collapses such as Debenhams and Topshop owner Arcadia, Boots remains committed to the UK high street, according to people familiar with the decision.
