Walgreens Names New CEO, Unveils $1 Billion Cost-Cutting Plan—Including 60 Clinic Closures Walgreens reported significant financial losses for its 2023 fiscal year, with operating losses reaching $6.9 billion.
By Madeline Garfinkle •
Key Takeaways
- Last week, Walgreens disclosed operating losses of $6.9 billion for the 2023 fiscal year.
- Walgreens intends to cut back on spending by closing clinics, shutting down unprofitable stores, and adjusting in-store operating hours.
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Last week, Walgreens Boots Alliance, Inc. reported operating losses of $6.9 billion in its earnings report for the 2023 fiscal year ending on August 31, $6.8 billion of which the retailer says was related to opioid lawsuit claims and litigation.
Amid the losses, Walgreens is now unveiling an aggressive cost-cutting plan, including closing 60 of its clinics, Axios reported.
The company also stated that it faced challenges such as a weaker respiratory virus season, reduced COVID-19 vaccine demand, and a challenging economic environment for consumers, as acknowledged by its executives in an earnings call.
As part of the cost-cutting measures, Walgreens will close 60 VillageMD clinics and unprofitable stores (the number of stories is not provided), and make adjustments to in-store operating hours based on local market trends.
On the corporate level, the company added it is suspending nonessential projects and requiring all remote workers to return to the Deerfield, IL office by the end of November.
Related: Walgreens' Battle Over High-Tech Cooler Doors Heats Up
The company has also been grappling with fierce competition from CVS Health, Walmart, and Amazon, all of which are focusing on expanding its primary care services.
"Walgreens has lost customer share in areas like beauty and personal care. Some of this is because prices remain too high and are uncompetitive – something more and more shoppers won't tolerate in the current environment," GlobalData Managing Director Neil Saunders told Reuters.
In the wake of the cost-cutting news, Walgreens shares surged by 7%, Axios added.
Walgreens Names New CEO
Walgreens also appointed healthcare industry veteran Tim Wentworth as CEO last week.
Wentworth was the CEO of pharmacy benefit management company, Express Scripts, and an executive at Cigna. He'll lead efforts to diversify Walgreens' healthcare services, Reuters reported.
The decision comes almost two months after former CEO Roz Brewer resigned after a little over two and a half years on the job. Ginger Graham, lead independent director at Walgreens, had been working as the interim CEO.
Wentworth retired in 2021 but ultimately decided to re-enter the workforce to take on the role of Walgreens' first-in-command.
"What made me decide to come back was a chance to lead this iconic brand and company at a time when it's not in a steady state," Wentworth told CNBC.
