Retail

Walgreens Shuttering 600 Stores

In the aftermath of its purchase of 1,932 stores from Rite Aid, Walgreens has announced news that it will be closing down 600 stores.

The store closings will be rolling across the next year and a half, according to CFO George Fairweather. Speaking on the firm’s quarterly earnings call, Fairweather noted that the locations marked for shutdown will mainly be Rite Aid locations — and usually as a result of their proximity to another Walgreens or Rite Aid locations.

Walgreens gained regulatory approval to purchase 1,932 stores and three distribution centers from Rite Aid for $4.38 billion in September of this year. In its most recent earnings report, the chain noted that as of this week, the first few Rite Aids have officially been brought into the Walgreens fold. Ownership of the remaining stores will progress in phases and is forecast to be completed by spring 2018.

The integration of the full suite of Rite Aid assets and stores, however, will be a three-year, $750 million project. On top of that, Walgreens has announced its intention to spend approximately $500 million of capital on store conversions and related activities.

As for its Q4 earnings — Walgreens reported a drop of 22 percent to $802 million. That bite came from the more than $300 million in termination fees and costs related to the company’s decision to call off its acquisition of Rite Aid Corp.

Excluding one-time items, Walgreens reported adjusted earnings of $1.31 per share. Analysts expected earnings of $1.22 per share.

Total revenue rose 5.3 percent to $30.15 billion — a better result than the experts were looking for. Same-store sales rose 3 percent, while sales in retail pharmacy division were up 7.5 percent to $22.3 billion.

Pharmacy sales, which made up 72.1 percent of the division’s sales, increased 12.6 percent. Retail sales fell 3.9 percent, however, with same-store retail sales down 2.1 percent.

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