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US store closures do not affect UK, says Walgreens

Walgreens Boots Alliance will close 200 of its US stores by 2017, but says “nothing has been announced” about similar closures in the UK

Walgreens Boots Alliance (Walgreens) has dismissed the question of whether it will import its US policy of pharmacy closures to the UK.

The company announced plans to close 200 of its more than 8,000 US branches earlier this month, but told C+D last week that “nothing has been announced on any UK closures”.

The US closures form part of plans to save $1.5 billion (£1bn) by 2017 by “restructuring and investing in the company’s future”, Walgreens said in its financial report, published on April 17. 

The company reported sales had risen to almost $27bn (£18bn) between December and February – a 36 per cent increase on the same period the previous year. It “largely” attributed this to the completion of its buyout of Alliance Boots on December 31.

According to the Walgreens website, closures and relocations meant its total number of US stores dropped by more 270 between September 2013 and August 2014, despite the company opening more than 180 stores during this period.

Matthew Williamson, pharmacy advisory director at brokers Christie + Co, told C+D that the announcement of 200 closures was “not unusual”.

 

200 closures 'not unusual'

 

Because Walgreens had so many branches across the US, there was a “good chance” the stores closing “may not be great performers”, he said. Large companies sometimes chose to “churn their estate” and reinvest money from premises sales into more profitable branches, Mr Williamson said.

Walgreens expects to grow its total number of branches by between 60 and 120 this financial year, according to its website.

Even if Walgreens did decide to sell some Boots stores, it would not reflect “nervousness about the sector”, Mr Williamson added. “If you’ve got 3,000 branches, there will be some that maybe don’t work for you but work in the independent sector”.

Walgreens said it achieved gross profits of $6.9bn (£4.6bn) between December and February, a 22 per cent increase on the previous year.

Its retail pharmacy international division – which includes Boots UK – reported sales of $2bn (£1.3bn), a 3 per cent increase compared to the same period last year, the company said. However, sales from its pharmaceutical wholesale division – which mainly operates under the Alliance Boots brand and includes Alliance Healthcare in the UK – had remained “relatively flat” at $3.9bn (£2.6bn), the report added.

 


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