Walgreen has said they will close-unperforming volume locations by August
the stores probably 10+ year old
is the Palm Beach County/Broward locations closing or we see
if there is a list
Walgreen Co. on Tuesday said it plans to shutter 76 unprofitable drugstores by August as part of a plan to save $40 million to $50 million per year beginning in its fiscal 2015.
The Deerfield-based drugstore chain, the nation’s largest, declined to specify the locations of the stores slated to close aside from saying they’re “spread across the country.” Walgreen said it will confirm the closures in the coming months after it notifies employees.
Most stores that will close either have had other Walgreens locations open in the same area or have seen real estate values decline since they’ve opened, the company said.
In a morning conference call with investors, Walgreen Chief Executive Greg Wasson said the move affects less than 1 percent of its locations nationwide and is part of an effort to “optimize our footprint and ensure our stores remain at the best corners of America.”
The majority of the stores slated for closure are located near other Walgreens locations, and most of their employees will be reassigned, Wasson said.
Including the closures, the company still plans to have a net increase in store count in 2014 of between 55 and 75 locations. It operates 8,210 drugstores nationwide, 138 more than a year ago.
Walgreen will take charges to pay for the contraction of between $240 million to $280 million in its third and fourth quarters.
The company also on Tuesday said second quarter net income fell slightly to $754 million, or 78 cents a share, down from $756 million, or 79 cents a share, in the same period a year ago, as a slower cold and flu season and severe weather throughout much of the United States dragged on profits.
Profits also were hurt by the introduction of fewer new generic drugs, which are generally more profitable for pharmacies.
The Deerfield-based drugstore chain said sales rose 5.1 percent to $19.6 billion, with sales in stores open at least a year up 4.3 percent.
Adjusted for certain items, net income was 91 cents a share, down from 96 cents a year earlier, missing Wall Street estimates by a penny.
Despite a 1.4 percent dip in customer traffic, the average purchase size rose 3.4 percent.
Judson Clark, an analyst with Edward Jones, said Tuesday’s news was mixed for investors.
“We view Walgreen’s underlying operations as somewhat weak, a position reinforced by the company’s decision to embark on a sizable cost-savings plan,” Clark said in a note to clients. “A significant positive, however, lies in Walgreen’s interaction with Alliance Boots, which is clearly doing well.”
Walgreen, which owns a 45 percent stake in the European pharmacy retailer and wholesaler, said it booked $236 million in savings in the first half of its fiscal 2014 as a result of the partnership. Further, it upped its estimate on total year cost savings to $375 million to $425 million, up from a previous estimate of $350 million to $400 million.
Shares opened higher, rising nearly 5 percent to $67.48, in morning trading.
Wasson also said the company has no plans to stop selling tobacco products, despite the February decision by its primary competitor CVS Caremark to halt sales by Oct. 1.
“What we’re focused on is to help encourage our customers to make healthy choices, not just with cigarettes, but with their daily habits,” Wasson said. “We think we’re well-positioned to help folks change their behavior who want to quit … and I don’t think there’s anyone better positioned with our retail pharmacists” and smoking cessation programs and products to help people kick the habit.
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