A spokesperson for Walgreens said in a statement that the announced closure of 200 stores in the U.S. is expected to have a "minimal" effect on how business is running so far. The spokesperson added that only less than three percent of the firm's overall store count will be affected.
In a statement to Business Insider, a spokesperson for the company said the upcoming store shutdowns will have "minimal disruption to customers and patients." However, some industry experts are still worried about the impact of the sudden announcement.
Before the reports were confirmed, Walgreens reportedly said in a call with investors months back that it would close down U.K.-based stores. However, it appears that even the United States will be hit by the changes that the company is going through.
The spokesperson explained that the shutdown of 200 U.S. stores is part of the company's "ongoing transformation" as it seeks to improve investments in some of the firm's major units.
The company further clarified through the spokesperson that the company is expecting to retain most of the staff in the affected stores. These employees are expected to be transferred to other nearby Walgreens stores.
In a regulatory filing, Walgreens explained that it is hoping to save up to $1.5 billion in annual expenses by 2022, which is why it had to make the decision of shutting down stores. As for earnings, the company is looking to reach between $1.9 billion to $2.4 billion.
Before the announcement was made, industry analysts have pointed out that there may be too many drugstores in the United States. Since many people in the country today prefer to buy online, physical stores may be at risk of the drastic changes in consumer behaviors.
Walgreens rival CVS has also announced in May that it will shut down 46 stores that were not performing as expected. In June, the drugstore chain's retail head further revealed that more underperforming branches will be closed.
CVS Health has been working to find ways that will improve traffic in physical stores. Additional healthcare services are expected to be added into the roster of services soon to attract more consumers to drop by the stores.
As for Walgreens, parent company Walgreens Boots Alliance chief executive officer Stefano Pessina, said earlier in June that there is a need to restructure the pharmacy business' processes and systems so the "rapidly changing market" will be catered to.
Some analysts said pretty soon, even non-healthcare companies may announce the shutdown of some stores as consumers lean on online shopping and more convenient purchasing methods.
