Walgreens Boots Alliance Inc. will shutter 200 U.S. stores, but then open 200 over the same period.
This story first appeared in the April 10, 2015 issue of WWD. Subscribe Today.
The disclosure was made by Alexander Gourlay, executive vice president of Walgreens Boots and president of Walgreen Co., during the company’s conference call to Wall Street analysts on second-quarter results.
Gourlay said, “This really is just getting the right stores in the right place,” he said of the store closures and openings.
And also I think it’s about the right cash and the right returns per store basis.”
Gourlay explained that the company will be looking at closing stores in locations where the population is moving away making those sites less productive in the future. The analysis is about the “right cash and the right returns per store basis,” he noted.
The closures are part of an additional cost-reduction initiative that will add $500 million to the $1 billion cost-reduction plan revealed in August. Included in the latest component of the initiative will be a reorganization of corporate and field operations.
The total project cost-reduction plan is projected at $1.5 billion, expected to be completed by the end of 2017.
Stefano Pessina, executive vice chairman and acting chief executive officer, said the company is also looking at opportunities for growth, both on the mergers and acquisitions front as well as those related to “potential joint venture” options.
On a GAAP basis, net earnings for the quarter ended Feb. 28 were $2.04 billion, or $1.93 a diluted share, versus $716 million, or 74 cents, a year ago. Net sales jumped 35.5 percent to $26.57 billion from $19.61 billion.
The company forecasted full-year adjusted net earnings at between $3.45 to $3.65 a diluted share.
Walgreens Co. and Alliance Boots GmbH combined to form Walgreens Boots Alliance on Dec. 31 when Walgreens completed its purchase of the stake in Alliance Boots it didn’t already own. Its initial 45 percent stake was acquired in 2012.
The second-quarter earnings report represents the first one disclosed since the two firms merged.