In an effort to boost its cost-cutting initiative, drug store chain Walgreens announced that it would close approximately 200 of its 8,234 stores. This action alone will boost previous forecasts of cost savings by a notable $150 million. Company representatives report an expected $1.5 billion in savings by the end of fiscal year 2017.
This publicized information is part of the first earnings report since Walgreens, the nation’s largest pharmacy chain, merged with European retail and drug giant, Alliance Boots, in 2014. The company impressed shareholders with strong earnings as stocks sold at over $92 per share, which represented a 5.6 percent increase in valuation. This is part of a significant second-quarter improvement in sales of $26 billion, which represented a 35.5 percent increase.
Corporate spokesmen have not indicated which of the likely two percent of the drug stores will be closing. They predict that the closings will be spread out over all of their properties. This will include Walgreens and Duane Reed stores in all 50 U.S. States, Puerto Rico, and the U.S. Virgin Islands.
In December of 2014, Walgreens closed on the deal with Alliance Boots for a reported $16 billion. The new company includes over 12,800 stores in 11 countries around North America and Europe. The company was renamed Walgreens Boots Alliance and acquired the new stock exchange ticker symbol of WBA.
The company’s stock increases have exceeded profit predictions by industry insiders as well as corporate forecasters. For the sales quarter closing at the end of February 2015, total company net earnings doubled to over $2 billion compared to $716 million in the same quarter of 2013. Besides the planned store closings and the boost in cost-cutting, Walgreens plans to reorganize many corporate operations and streamline information technology functions within the company.
The Walgreens Corporation was founded in 1901 in Chicago, IL and the corporate headquarters are still located in the Chicago suburb of Deerfield, IL. Galesburg native, Charles Walgreen, Sr., started his first drug store on a little corner on the south side of Chicago and by the year 1920, he had expanded his franchise to more than 20 stores.
Because of prohibition in this era, prescription whiskey was a hot commodity. Walgreens sold alcohol often stocked underneath the front counter. Corporate growth continued through the 20’s and by 1930, Charles Walgreen, Sr., was operating over 400 stores and had expanded into neighboring states. The company’s alcohol sales propelled it safely through the Depression and by the mid-30’s, Walgreen, Sr. had added another 200 stores. His stores were originally connected to local grocers. In recent history, most facilities have become free-standing corner stores to attract optimum traffic.
Walgreens, known as “The Pharmacy America Trusts,” has also been instrumental in popularizing an American dairy treat–the malted milk shake. Invented by Ivar “Pop” Coulson in 1922, the malted milk shake became a staple at the popular fountains within most of its stores.
The company has maintained the family operated distinction throughout most of its existence with a family member being in some sort of senior leadership position, if not CEO. The company has been consistently prosperous throughout its operation. With the planned store closures and continued emphasis on cost-cutting reorganization, Walgreens appears to be poised to continue this prosperous tradition.
By Chris Marion