Walgreens is about to shut 5 areas throughout Los Angeles and Orange counties within the coming weeks — a transfer that would end in a minimum of 93 job losses because the struggling retailer strikes forward with a downsizing that can see round 1,200 closures nationwide.
The pharmacy chain will shutter shops in Whittier, downtown Los Angeles, Orange, Placentia and Stanton, in line with a discover submitted to California’s Employment Improvement Division.
The shop closures will result in layoffs for a variety of staff, together with pharmacists, pharmacy technicians, cashiers, retailer managers and stock specialists.
Final month, Walgreens’ high government stated that the corporate was seeing a 52% improve in “shrink” — an business time period which implies lack of stock that can’t be accounted for via gross sales or different professional means.
Tim Wentworth, CEO of father or mother firm Walgreens Boots Alliance Inc, stated that anti-theft measures corresponding to locking up objects behind glass encasing led to lowered gross sales.
The affected Walgreens areas in Southern California will shutter for good between March 20 and March 27 — with layoffs various from eight to 27 staff per location.
Marty Maloney, Walgreens’ director of media relations, cited rising regulatory and reimbursement pressures as key elements contributing to the choice.
“It is never an easy decision to close a store,” Maloney advised the Los Angeles Each day Information.
“We know that our stores are important to the communities that we serve, and therefore do everything possible to improve the store performance.”
Malone added that the corporate “will work in partnership with community stakeholders to minimize customer disruptions.”
Walgreens, one of many largest pharmacy chains in the US, has been grappling with monetary difficulties in recent times — which have been exacerbated by declining foot visitors, elevated labor prices and decrease reimbursement charges for pharmaceuticals.
Within the final 5 years, the inventory value of father or mother firm Walgreens Boots Alliance Inc. has plummeted by a whopping 82%.
In July 2015, the inventory reached file highs north of $90 per share. As of Wednesday morning, it was buying and selling at simply $9.36 per share.
The COVID-19 pandemic initially boosted revenues as a consequence of demand for vaccinations and testing, however because the disaster waned, gross sales softened whereas operational prices remained excessive.
The corporate has additionally been weighed down by authorized settlements associated to opioid litigation.
Walgreens, together with different main pharmacy chains, agreed to pay billions in settlements after being accused of contributing to the opioid disaster by failing to correctly monitor the distribution of prescription painkillers.
In response to those monetary strains, Walgreens introduced plans final 12 months to shut underperforming shops throughout the nation.
The corporate has not disclosed an actual quantity, however business analysts estimate that a whole lot of areas may very well be shuttered.
In a January earnings name, Walgreens CEO Tim Wentworth indicated that retailer closures and operational restructuring are a part of a broader technique to streamline bills and enhance profitability.
Walgreens shouldn’t be alone amongst pharmacy retailers which might be struggling amid shifting shopper behaviors, rising operational prices and authorized challenges.
Ceremony Support, which filed for Chapter 11 chapter in late 2023, has already introduced the closure of greater than 100 shops nationwide, together with 31 in California.
The corporate has been trying to restructure its debt whereas coping with its personal opioid-related lawsuits and declining gross sales.
CVS, Walgreens’ foremost competitor, can also be within the midst of a strategic downsizing plan.
In 2021, the corporate introduced that it might shut 900 shops over three years because it shifts focus towards increasing its healthcare companies and digital presence.
Like Walgreens, CVS has confronted lowered foot visitors and rising prices, prompting it to re-evaluate the profitability of sure areas.
Past the pharmacy sector, conventional brick-and-mortar retailers have been struggling as nicely.
Main manufacturers corresponding to Mattress Tub & Past, Household Greenback and Macy’s have closed shops in latest months as a consequence of declining in-store gross sales and growing competitors from e-commerce platforms.
The broader retail business has seen a shift towards on-line procuring and same-day supply companies, making it more and more troublesome for bodily shops to stay worthwhile.
The closures of Walgreens shops in Southern California will seemingly have a major affect on native communities, notably those who depend on these areas for important drugs and on a regular basis home items.
In some neighborhoods, Walgreens serves as one of many few simply accessible pharmacies, particularly for aged residents and people with restricted transportation choices.
