Walgreens Boots Alliance has acquired its first few Rite Aid stores.
The first several stores were acquired this past week, the company said in an update linked to its earnings report. Walgreens got regulatory clearance for the Rite Aid deal (a different one than the original proposed in 2015) in September, and is slated to buy 1,932 stores, three distribution centers and related inventory from Rite Aid for about $4.38 billion.
Walgreens expects to take over other Rite Aid stores in “phases,” according to a company statement, with completion of the store transfers anticipated for spring 2018. The business anticipates spending $750 million in integration costs and about $500 million on store conversions, but expects the deal to bring about $300 million in synergies that will be realized within four years of the closing. It also gives Walgreens access to geographic areas of the U.S. where it was not as well penetrated, such as the Northeast.
In connection with the Rite Aid deal, Walgreens is reviewing its combined store portfolio to “optimize locations” over the next 18 months. The business plans to close about 600 stores and related assets starting in spring 2018, Walgreens executives said on the company’s earnings call.
Walgreens released full-year and fourth-quarter numbers Wednesday.
For the fiscal year, net earnings decreased 2.3 percent, to $4.1 billion. Sales increased 0.7 percent, to $118.2 billion. Diluted net earnings per share decreased 1 percent to $3.78.
For the fourth fiscal quarter, Walgreens’ net earnings deceased 22.1 percent to $802 million. Net sales increased 5.3 percent to $30.1 billion. Diluted net earnings per share were down 20 percent, to 76 cents.
The company’s numbers were impacted by costs associated by the Rite Aid deal.
Walgreens provided fiscal 2018 guidance of $5.40 to $5.70.
“We are pleased to report the company has performed well, with our businesses delivering significant progress while managing against ongoing prescription reimbursement pressure and competing in fast-changing retail environments,” said executive vice chairman and chief executive officer of Walgreens Stefano Pessina. “We look forward to building on this solid underlying growth in the year to come, enhanced by the expansion of our U.S. retail pharmacy network through the upcoming purchases of Rite Aid stores.”