In its third round of layoffs this year, Walgreens Boots Alliance announced the elimination of 256 corporate positions, part of a broader strategy to reduce costs and boost financial stability.
Fierce Healthcare reports the cuts follow earlier rounds in January and March, as Walgreens navigates a challenging fiscal environment.
The pharmacy chain faces pressure from slowed consumer spending and increasing pharmacy reimbursement challenges.
Fraser Engerman, Walgreens spokesperson, said:
“This action is necessary to position us to rapidly respond to the changing external environment.”
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Earlier Layoffs Reflect Financial Strain
Walgreens’ recent layoffs are part of a series of corporate reductions in response to financial pressures:
- May 2023: 504 corporate jobs were cut, representing 10% of the corporate workforce.
- July 2023: Another 400 roles were eliminated at an Illinois distribution center.
- January 2024: 145 positions, mostly corporate, were removed.
- March 2024: Distribution centers in Florida and Connecticut closed, affecting 646 employees.
These workforce reductions were accompanied by store closures, as Walgreens continues its turnaround plan, including the closure of two distribution centers in March and plans to close 1,200 stores by 2027.
Financial Struggles Highlight Need for Turnaround
Facing $8.6 billion in losses for fiscal 2024, Walgreens reported a net loss of $3 billion in the fourth quarter alone. This steep decline is due in part to costly expansions into primary care through its VillageMD acquisition and headwinds from weaker retail sales.
Key Financial Highlights:
- Fourth-Quarter Loss: $3 billion net loss.
- Full-Year Losses: $8.6 billion, marking a 180% increase from the previous year.
- Store Closures: Plans to close 500 stores in fiscal 2025, aiming to enhance cash flow and earnings.
Walgreens’ earnings report from October cited these closures as crucial to boosting adjusted earnings per share (EPS) and free cash flow.
Walgreens CEO Outlines Path to Stability
CEO Tim Wentworth emphasized the company’s commitment to stabilizing its core retail pharmacy business, sharpening its retail strategy, and improving cash flow and debt management.
- Cost-Cutting Milestones: Walgreens achieved over $1 billion in cost reductions, cut capital expenditures by $700 million, and garnered $600 million in working capital benefits.
- Focus Areas: With a focus on its core pharmacy business, Walgreens aims to streamline operations and prioritize areas with sustainable growth potential.
Future Focus
- Strengthening Core: Walgreens is dedicated to improving its traditional pharmacy operations amid competitive and economic pressures.
- Retail Strategy: Management aims to streamline retail operations to match current consumer demand trends.
The company’s ongoing adjustments reflect a strategic shift to build a sustainable foundation in a dynamic market. As the company restructures and reduces overhead, the focus remains on restoring profitability and meeting the healthcare needs of millions across its network.
