Struggling pharmacy chain Walgreens Boots Alliance decided to make a drastic move of closing 1,200 stores in an attempt to boost its business and improve profitability under new CEO Tim Wentworth. The news instilled optimism among investors, sending Walgreens stock up more than 15% on Tuesday.
Walgreens intends to complete its planned store closure in the following three years. The plan will involve closing 500 stores in 2025, with the focus being on underperforming locations and those on expiring leases.
The news follows an announcement from June in which the pharma chain said that it plans to close 300 stores. These stores will count towards the overall 1,200 stores set for closure.
Walgreens currently operates around 8,000 stores across the United States, with approximately 2,000 of them being labeled as “unprofitable” by the company.
“This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” Wentworth said in a press release.
The company also shared better-than-expected earnings, reporting $0.39 in earnings per share compared to $0.36 estimated by analysts. Its revenue of $37.55 billion also came above the expected $35.55 billion.
The shares of Walgreens have gone up 15.76% in the aftermath of the announcement and traded at $10.42 per share. However, the company’s stock still remains 61% down year-to-date.