Walgreens said it would close 12 stores in San Francisco next month in an effort to control rising costs.
In a statement emailed to CoStar News, the company cited “increased regulatory and reimbursement pressures” that have hampered the national pharmacy chain’s ability to “cover the costs associated with rent, staffing, and supply needs.”
The news comes just months after the pharmacy chain announced the shuttering of 1,200 underperforming stores nationwide over the next three years in an effort to improve earnings.
“It is never an easy decision to close a store. We know that our stores are important to the communities that we serve and therefore do everything possible to improve the store performance,” said Walgreens, which promised to “work in partnership with community stakeholders to minimize customer disruptions.”
Executives at the Deerfield, Illinois-based healthcare firm said they were also evaluating if they should close an additional 800 stores the company has been monitoring. The company maintains that about 6,000 of its U.S. stores are profitable, according to previous reporting by CoStar News.
Walgreens and its rivals, such as CVS and Rite Aid, have struggled in a competitive environment amid sales and profit slumps in the past year, resulting in store closings among other financial moves. Reports emerged last month that Walgreens and private equity firm Sycamore Partners were discussing a deal, though the company declined to comment.
Walgreens’ holding company operates more than 12,500 stores worldwide, including the Boots drugstore chain.
City pullback
Drugstore chains have had a particularly hard time in the current economic environment, facing a consumer spending pullback, financial pressure due to lower reimbursement rates from insurers, and juggernauts such as Walmart, Target and Amazon entering the pharmacy business fray.
Last month Rite Aid emerged from Chapter 11 with what it called a "rightsized store footprint" of about 1,300 stores, down from the 2,100 it had the year before. In November 2021, CVS said it planned to shutter 900 stores in the next few years, according to CoStar News.
In San Francisco, leaders have raised concerns about the loss of neighborhood pharmacies, which lower-income communities in particular rely on to fill prescriptions and buy health supplies.
Walgreens has been gradually shuttering stores around the city in the past few years, shuttering nine stores since 2021, citing rampant retail theft.
The 12 stores slated to close will shutter nearly a third of the city’s Walgreens stores, which currently number 41, according to the website.
