Walgreens, the United States’s largest drug retailing chain, announced plans to close 200 stores across the country as part of its $1 billion charge-reduction strategy.
The company also announced that it will undergo corporate reorganization and streamline information technology by the end of 2017.
In addition, Walgreens will cut back on the number of promotions it offers to try and increase profit margins.
The retailer said that its moves are designed “to restructure and invest in the company’s future in a way that is better for customers and simpler for employees, resulting in a faster and more agile company,”
Last year Walgreens purchased the remaining 55% of Switzerland-based Alliance Boots, which runs the United Kingdom’s largest pharmacy chain, to create a global business.
The two companies merged to form a new holding company, Walgreens Boots Alliance Inc., on December 31, 2014.
A Wall Street Journal report, written by Paul Ziobro, said that the company’s “management team, largely made up of faces from European merger partner Alliance Boots, has found plenty to fix on this side of the Atlantic.”
During an earnings announcement for its second quarter and first six months of fiscal year 2015 the company said:
“After a rigorous analysis, the company has identified additional opportunities for cost savings, primarily in its Retail Pharmacy USA division,”
“These additional opportunities will increase the total expected cost savings program by $500 million to a projected $1.5 billion by the end of fiscal 2017.”
Walgreens’ fiscal year is from 1 September to August 31. About 40% of US businesses do not have calendar fiscal years.
Closures only amount to 2 percent of Walgreens stores in the US
According to The Associated Press, the closures will only amount to 2 percent of the 8,232 drugstores that Walgreens operates in the US, Puerto Rico and the U.S. Virgin Islands.
The list of stores to be closed has not been finalized yet. However, Walgreen Co. President Alex Gourlay told analysts that the stores likely to be closed are those where the population appears to be moving away.