Walgreens may not be 'down on your corner' for long. Walgreens is making plans to close 76 stores later this year due to profit challenges. The challenge is reportedly due to generic drugs and the effects of the winter weather on consumer traffic, according to a Sun-Times report on Tuesday. Walgreens drugstore chain asserts that the closing of the many stores are an effort to optimize the company’s asset base.
Overall, 76 stores is just a small percentage of the firm’s total number of stores – which is 8,210. The plan for closing stores, of course, is a dramatic shift in the company’s former focus of opening location after location to be conveniently located for its customer base.
The second fiscal quarter earnings report for Walgreens shows that earnings fell from a year ago. Walgreens took a $60 million hit and thereby missed the expectations of Wall Street.
Executives with Walgreens are pointing the finger at generic drugs – which are obviously less expensive alternatives to name-brand medications. Somehow, generic drugs hit drugstore sales but improve profitability due to the generic drugs having a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives. The company expects generic drugs to begin helping it yearly performance by the end of this fiscal period.
As far as the challenging winter affecting Walgreens, the company said that the bad weather kept customers away and forced some stores to close temporarily. Additionally, the removal of snow costs added up to approximately $23 million this past winter for all their many properties to keep cleared for customer access to their stores.