Walgreens announced today that it planned to close 1200 stores. In case you think this is due to a recent wave of shoplifting, check this out:
Walgreens stock has been sliding for a decade, losing 90% of its value. This started shortly after they acquired the British chain Boots, which they've had difficulty integrating.
Shoplifting may be a problem at some Walgreens locations, but it's not why they're closing stores. That's happening for the most prosaic of reasons: Profits have been weak for years and were negative last year, mostly due to competition from Amazon and other online outlets. Walgreens is in the middle of attempting a turnaround and, as retail companies always do, is closing their least profitable locations as part of that. Sometimes a cigar is just a cigar.
Never mind. I read "Walmart" where Kevin wrote "Walgreens". sigh.
Near me you pass a Walgreens on the way to the Walgreens with the other Walgreens down the road. So a thinning of the Walgreens hardly seems like it is likely to make much of a difference here.
That's mostly because they took over so many competitors.
In the rural area where I live, they closed the Walgreens in our town 2 years ago (it had only opened 3 years earlier) and the one in the town 10 miles away last year. Now the nearest Walgreens is 30 miles away. Maybe a rural college town of our size simply can't support a Walgreens, but overbuilding a la Starbucks is not the issue.
As mentioned above, they overbuilt. They also have some absolutely atrocious management. One of the kids worked for a local Walgreens for about 3 months before she couldn't take it anymore. Yes, the shoplifting was bad - but oh the stories about the management (both in store and corporate) were enough to make me never shop at another store again.
They also bought out a bunch of the competition,
I have three Walgreens within a 2 mile radius of my house. Some years ago they made a deliberate decision to go for high density and built stores everywhere. Seems like it was a bad idea.
The Boots acquisition also didn't work out too well. They swallowed a big turkey and have suffered indigestion ever since.
Not a Walmart fan either, Dr Jay, understand the impulse.
Just for perspective, using mostly AP figures from today: Walgreens lost $3 billion in the most recent quarter; most of that is loss and opioid write-offs, apparently to get the bad news out of the way all at once. But still, not necessarily a great look, and they racked up over $8-1/2 billion in losses their most recent fiscal year.
Context is that they have about 8500 stores in the US now and the current bigwig says about 6000 of them are doing just peachy, so nobody should think they're sinking beneath the waves. And this announcement is bringing up the stock price today.
For comparison, CVS is closing 900 of its locations and Rite-Aid is down to about 1300 *total* stores after its restructuring bankruptcy. All these drugstore chains have been getting squeezed by dollar-store expansion as well as Walmart on the non-prescription side and declining prescription reimbursement rates on that side (must be those pharma benefit managers at work or something).
Of course none of this kind of reality-based info would stop a Vance or a trump from blaming the losses on shoplifting by vicious Guatemalan gangs and Haitian pet-eaters and calling for all brown people to be shot on sight and run over by tanks and whatever semi-medieval fantasy they could come up with. Sigh. But Kevin's right to emphasize business conditions over whatever's getting publicized in the general-purpose headline-writing game.
Walgreens also sought to merge with Rite Aid but was prevented to by the government on anti-trust grounds yes?
There is also the mail order prescription business. On my plan for chronic stuff you get three months for the price of two. Then there's the mysterious Good Rx app which lowers the price of the one prescription I get at Rite Aid because it's much cheaper than the mail order place for some reason (the Rite Aid farther from me since the close one closed last year.)
I was going to get some toothpaste at Walgreens (another one a few blocks in the other direction closed several years ago, and this one was a Rite Aid then Walgreens built a store across the street which closed in a couple years and the Rite Aid turned into a Walgreens) but it was behind plastic so I got it somewhere else. In southern Brooklyn where I live there is a usually Asian run 99¢ kind of store on every block as an alternative for some stuff. Sometimes two.
Retail has always been an ever changing business even before Amazon, but of course now Amazon is impacting most brick and mortar stores.
Nine years ago I made a conscious decision to use local pharmacies for medications. I rarely go to a chain unless it's an emergency
My local CVS is in the process of putting all the goods behind plexiglass. When they get to the stuff I buy, I will switch to Amazon.
The last two times I was there, there were no checkout clerks because they were all busy unlocking cases. I saw some people shoplift in frustration at not being able to complete their purchases.
Not only do they make you wait for someone to unlock the case, they also do not give you the product to maybe continue shopping. They take the product to the register. It’s really annoying.
C'est une pipe.