US-based pharmacy operator Walgreens has announced plans to let go of up to 4,000 employees working at its Boots drugstores in the UK. The company, which owns the U.S. second-largest pharmacy store chain, has managed to mostly thrive amid the months-long lockdown and restrictions caused by the coronavirus pandemic.
However, its latest announcement may be a sign that it is facing some financial challenges amid the wider global economic slump.
The amount of employees that will be affected by the company's announcement only represents around 7 percent of its total Boots drugstore unit's workforce. Globally, the number of employees that will be laid off is only a tiny fraction of its worldwide workforce of more than 440,000.
Walgreens revealed its layoff plans on Thursday during its latest quarterly earnings call, where it reported worse-than-expected results. For its latest quarter, Walgreens reported a 43 percent drop in its adjusted earnings. It also reported a substantial $1.6 billion operating loss for the period.
Following the release of its latest quarterly earnings, the company's stock prices dropped a further 8 percent. Since the start of the year, its stock prices have plunged by more than 35 percent, making it one of the worst-performing stocks on the Dow Jones.
The company's businesses outside of the US performed particularly worse for its latest quarter. Its overall sales for the quarter fell by about $700 million to $750 million. Walgreens revealed that most of the reduction in its sales were in Europe, where governments had imposed stronger pandemic-restrictions.
For its Boots drugstores, Walgreens reported a massive 85 percent drop in sales. While sales of its food and medicine products remained in the acceptable range, sales of its premium beauty and fragrance offerings were relatively non-existent.
The company pointed out that most of its Boots stores had remained open during the lockdowns but it had to close down more than 100 locations, particularly those located in airports, bus stations, and train stations. At the peak of the crisis in Europe, Walgreens was forced to furlough more than 16,000 of its workforce in the region.
Similar to other brick-and-mortar retailers, including its rival CVS, Walgreens has been struggling to make a profit during the pandemic. The company had also faced increased competition from online competitors such as Amazon and Walmart, which became the go-to outlets for consumers who were stuck inside their homes.
Over the past year, Walgreens had been forced to permanently close some of its stores in the US and the UK to reduce its expenses. To remain competitive, Walgreens has been rapidly digitizing its business with the hopes of getting more of its consumers back into its pharmacies.
