Walgreens is set to permanently close multiple pharmacy locations in Southern California due to regulatory pressures impacting costs.
Key Takeaways
- Walgreens will close five stores in Southern California, including Whittier and Los Angeles, by late March 2025.
- Increased regulatory and reimbursement pressures prompt the closures, affecting rent, staffing, and supply costs.
- The closures are part of Walgreens’ “footprint optimization program,” planning 1,200 store closures over three years.
- Walgreens aims to minimize customer disruptions by collaborating with community stakeholders.
- At least 93 employees might lose their jobs, but Walgreens plans to redeploy most affected staff.
Southern California Store Closures
Walgreens announced the permanent closure of five retail pharmacy stores in Southern California by late March 2025. These locations include Whittier, Los Angeles, Orange, Placentia, and Stanton. The company attributes these closures to increased regulatory and reimbursement pressures, affecting the ability to manage rent, staffing, and supply costs. The decision is part of a broader “footprint optimization program,” which plans to close 1,200 locations over three years.
Increased regulatory pressures have significantly affected Walgreens. The closures aim to stabilize the U.S. retail pharmacy business as part of the company’s turnaround strategy. In an effort to minimize customer disruptions, Walgreens has vowed to work with local community stakeholders whenever store closures occur. CEO Tim Wentworth highlighted that retained stores are now outperforming those earmarked for closure, ensuring the effectiveness of the optimization program.
Impacts on Employees and Community
At least 93 employees face potential job losses, affecting various roles such as pharmacy technicians, pharmacists, and store managers. Walgreens hopes to redeploy most affected employees to other locations, demonstrating an effort to maintain employment where possible. The closures respond to numerous challenges, including changing consumer habits and financial burdens from opioid settlements. Similarly, Rite Aid has also closed 31 stores in California due to declining sales and opioid-related lawsuits.
“Increased regulatory and reimbursement pressures impacting the ability to cover rent, staffing, and supply costs played into the pharmacy store chain’s decision to shutter the locations.” – Walgreens
Additionally, Walgreens reported sales of $39.46 billion for the first quarter of fiscal 2025 but suffered a net loss of $265 million. This ongoing fiscal struggle reinforces the necessity of the footprint optimization program. While challenging, Walgreens remains committed to minimizing customer disruptions during these closures and ensuring that retained stores continue to function efficiently and profitably.
Looking Ahead
Walgreens emphasizes the importance of aligning its store network with market demands and regulatory realities. The footprint optimization program remains a critical strategy to reduce expenses and improve profitability. By focusing on stores that perform well, Walgreens hopes to build a more efficient and sustainable business model in the challenging retail pharmacy landscape. Though the closures pose challenges, including employment impacts and community service disruptions, these are intended to position Walgreens for long-term success in the U.S. retail pharmacy market.
“Currently, we see comparable front end sales in our retained store fleet outperforming those stores slated to close this year by approximately 250 basis points and comparable pharmacy scripts by approximately 390 basis points.” – Tim Wentworth
Considering competing drugstore challenges and the ongoing struggle with regulatory pressures, Walgreens aims to work alongside affected communities to ensure a smooth transition. The effort reflects an intent to maintain service quality and accessibility even amid significant structural changes.
Sources
1. Walgreens closing stores in Whittier, downtown L.A.
2. Walgreens permanently closing some stores in Southern California
