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Boots will close 300 stores in the UK and a further 150 Walgreens branches in the US over the next year as parent company Walgreens Boots Alliance seeks to “optimise” locations.
James Kehoe, executive vice-president and global finance chief, confirmed the closures during an earnings call with analysts on Tuesday.
“As you have seen, we are accelerating our portfolio optimisation to further simplify the business,” he said.
The decision was announced as the pharmacy group slashed its earnings forecast for the year amid weakening demand for Covid-related products and said consumers were more “cautious and value-driven”.
It also raised its cost-savings target after it missed profit expectations in the third quarter, sending the shares down 9 per cent to $28.64 in afternoon trading — the lowest in more than 11 years.
“Similar to other retailers, we’ve been impacted by the rapid softening of the macro environment and a more cautious and value-driven consumer,” Walgreens chief executive Rosalind Brewer said on its conference call.
It reported a 0.2 per cent fall in same-store sales at its retail division, compared with estimates of a 2.1 per cent increase after lower demand for Covid-19 tests and vaccines. Same-store sales at its pharmacies, however, rose 9.8 per cent ahead of estimates of 8.8 per cent, partly thanks to higher prices.
Walgreens now expects adjusted earnings per share of $4.00 to $4.05 in 2023, from $4.45 to $4.65 previously. Profit fell 59 per cent to $118mn in the quarter to May 31 but sales were up 8.6 per cent to $35.4bn.
The latest round of closures in the US comes after the company said it would close another 200 sites in 2019.
In the UK, Boots said it would continue to refurbish and consolidate stores that are close to each other over the next year. No redundancies have been proposed and all affected staff will be offered work at nearby stores.
A year ago, Walgreens abandoned plans to sell Boots, which was expected to bring in billions of dollars, blaming instability in the financial markets.
Most closing Boots sites are located within 5km of another, with customers largely remaining within a 10-minute drive of an outlet. Across the UK 1,900 branches will be left.
The move will allow the retailer to “concentrate its team members where they are needed and focus investment more acutely in individual stores”, the chain said.
Boots remains committed to the UK high street, according to people familiar with the decision, despite high-profile collapses such as Debenhams and Topshop’s owner Arcadia.
