Filed under: Company News, Earnings, Retail, Stores
Walgreen plans to close about 200 U.S. stores as the nation's largest drugstore chain expands on a $1 billion cost-reduction plan it announced last August.
The Deerfield, Illinois, company said Thursday that it also will reorganize its corporate operations and streamline its information technology and other functions. It expects the moves to add $500 million to its estimate for cost savings from its three-year plan.
The store closings amount to about 2 percent of the 8,232 drugstores it runs in the United States, Puerto Rico and the U.S. Virgin Islands.
Walgreen said its moves will lead to a "faster and more agile company." It expects to book pre-tax charges for the restructuring of between $1.6 billion and $1.8 billion as it implements the program.
Late last year, Walgreen completed a nearly $16 billion deal to purchase the remaining stake of European health and beauty retailer Alliance Boots that it didn't already own. The company was renamed Walgreens Boots Alliance Inc. (WBA).
Walgreen initially bought a 45 percent stake in Alliance Boots, which runs the United Kingdom's largest pharmacy chain, in 2012 for about $6.7 billion in cash and stock. Analysts expect Walgreen will get added negotiating muscle over supplies like pharmaceuticals from the Alliance Boots deal and another ownership stake it acquired in pharmaceutical wholesaler AmerisourceBergen Corp. (ABC). But the drugstore chain disappointed investors last August when it also lowered a forecast for earnings it expects after combining with Alliance Boots.
Walgreen also said Thursday that it earned $2.04 billion, or $1.93 a share, in its fiscal second quarter. Earnings, adjusted for one-time gains and costs, were $1.18 a share.
That topped Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of 94 cents a share.
But the drugstore chain's revenue of $26.57 billion fell short of analyst forecasts for $27.73 billion.
Walgreen also announced a forecast for full-year earnings in the range of $3.45 to $3.65 a share.
Analysts expect, on average, earnings of $3.62 a share, according to the data firm FactSet.
Walgreen shares edged up 32 cents to $88 in premarket trading about 90 minutes before the market open. The stock had already climbed about 15 percent so far this year, as of Wednesday.
