Walgreens Closing Stores In The U.S., Around 5,000 Workers Will Lose Jobs In Global Growth Plan
With Walgreens closing stores in the United States, the company has announced that they are making $500 million in budget cuts in order to remain competitive against their main rival CVS Health and also so they can afford an international growth plan. But how many U.S.-based Walgreens employees will lose their jobs based upon this plan?
In a related report by the Inquisitr, a tech super shop brand owned by Best Buy called Future Shop closed up and many workers lost their jobs.
In the late part of 2014, Walgreens completed its acquisition of European drug retailer Alliance Boots and began trading under the ticker symbol WBA (Walgreen Boots Alliance) in order to reflect this merger. The new management team, led by Italian billionaire Stefano Pessina, plans to have Walgreens closing stores as a stepping stone toward its international growth plan.
“After a rigorous analysis, the company has identified additional opportunities for cost savings, primarily in its Retail Pharmacy USA division,” the company said Thursday, according to USA Today. “Significant areas of focus include plans to close approximately 200 USA stores; reorganize corporate and field operations; drive operating efficiencies; and streamline information technology and other functions.”
The 200 Walgreens closed will save around $500 million, which is just the first step in a $1.5 billion plan they intend to have finished by the end of fiscal year 2017. According to the Wall Street Journal, it’s said that “overseas sales rose 2.9 percent at stores open at least a year,” so most of the cost-cutting is taking place in the United States, not Europe.
According to Forbes, it’s possible management is having Walgreens close stores since they are not meeting expectations by investors.
“Walgreens reported second-quarter profits of $2.06 billion, or $1.93 a share. That is higher than $716 million, or 74 cents a share, in the year-ago quarter. Sales rose to $26.6 billion from $19.6 billion. Some analysts thought revenue should be $1 billion higher.”
CEO Pessina says that having Walgreens close stores will lead to the overall company coming “out of this stronger and better,” but the same can’t be said for the U.S. Walgreens workers who will be losing their jobs. Pessina says “some parts are better than expected, while others have room for improvement,” but they have yet to specify which Walgreens will being closing in 2015. The company does not have a “hard timeline” for this plan, and they do not intend on “focusing on any specific geographic area,” besides the U.S. in general.
With Walgreens closing stores, the reduction will represent about two percent of the 8,232 drugstores in the United States, Puerto Rico, and the U.S. Virgin Islands. Although the company hasn’t said exactly how many Walgreens workers will lose their jobs, according to the company website, each location employs about 20 to 25 workers, meaning that a maximum of approximately 5,000 people will be unemployed based upon this international growth plan.
The good news is that management will have Walgreens closing stores while still opening in other new U.S. locations. Although they have not announced the exact number of new stores to be opened, it will likely be based upon potential profitability.
“This really is (about) getting the right stores in the right places,” said Alex Gourlay, executive vice president of Walgreens Boots and president of Walgreens.
In the future, CEO Pessina believes they will have a smaller number of Walgreens closed at one time in order avoid such a large impact.
“In the future, once we have created this new base, I believe we should every year review all the stores and if every year we have to close 10 stores… we will have to do it,” Pessina said. “It’s better to do this gradually over time.”
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