Walgreens Earnings Are Down

[Alpha8472]

The company is blaming their drop in earnings on inflation, reduced SNAP benefits, lower tax refunds, and reduced COVID sales.

During COVID, Walgreens was hiring pharmacists and pharmacy technicians like crazy. Walgreens was giving out COVID vaccinations like crazy. People were lining up all day long seeking COVID vaccinations and tests. Customers were buying expensive COVID test kits like there was no tomorrow. People were also buying cold and cough medications until the shelves were empty.

Now no one wants COVID vaccinations and no one is buying COVID tests. The government stopped paying administration fees for COVID vaccinations for the uninsured. Now every COVID vaccination for an uninsured person is forced to be given away for free. The pharmacist is working for free giving away these vaccinations when the small number of people do request a COVID vaccination.

Walgreens made money like crazy during the pandemic on COVID sales, but now that COVID is practically gone Walgreens has missed its earnings forecast.

Now Walgreens has to face competition from other stores such as Costco, Walmart, and Target.

Walgreens is planning to close 140 stores. Will store closures really help that much?

https://chainstoreage.com/walgreens-q3- ... ovid-sales

[storewanderer]

Walgreens has been closing stores fairly steadily. They have, in my view, a lot of underperforming stores that need to be closed. Their stores are also starting to run down quickly and will need significant capital investment in the coming decade that I am not seeing happening.

CVS has underperforming dire stores too but they have a large closure program going plus they seem to have far lower store overhead than Walgreens (smaller, older stores, forced self checkout in many stores, higher prices, lower product mix, plus the Caremark thing automatically makes prescription sales far more profitable for CVS to do itself).

Walgreens and CVS did exceptionally well during COVID making money on COVID Vaccines and COVID Tests.

All pharmacies are less busy now than they have been in years from what I am seeing.

[jamcool]

More of them may be converted into Village Medical Clinic/Walgreens combo- and the Walgreens side is heavily reduced. This from a chain that used to have only a few large stores in any city-usually downtown and at the shopping malls.

[Alpha8472]

I remember back in the 80s and 90s that the only Walgreens in my area of the San Francisco Bay Area was a mall store. Back then Walgreens seemed more like a variety store. People would shop for random items while they were at the mall. The store had toys and various cheap items. I am not even sure that that Mall-greens had a pharmacy.

It was not until around 2003, that Walgreens started opening up brand new stores all over the San Francisco Bay Area with prescriptions pharmacies. This explosive growth made it seem like Walgreens was popping up everywhere.

Now their out of control expansion is coming back to haunt them

[storewanderer]

As I recall those mall-based Walgreens did not have a pharmacy. I recall one in that mall in San Bruno that is getting demolished and it definitely had no pharmacy. However out in Milpitas there was a Save Mart (Frys) and next to it was a strip mall Walgreens and that store was a bit larger and definitely had a pharmacy.

CVS back east also used to run mall-based stores with no pharmacy very similar to those mall-based Walgreens Stores in the bay area.

Walgreens had close to a decade of explosive growth throughout the US; they were missing in most states in the 90's but by that late 2000's they were in almost every state if not every state due to the quick expansion, they were opening multiple new stores every day, and funding that expansion with cash and share issues (no debt). They tended to overstaff stores back then to have employees to open the ongoing stream of new stores up. Most of the real estate during the expansion period was leased though, they weren't expanding on owned real estate, so there is that.

It wasn't until Boot's came along that Walgreens financial condition/debt levels got more similar to other companies. It was a real shame they went through with the Boot's merger. Boot's is clearly a drag/dog, they are also closing 300 Boot's as part of this announcement of 150 US Store closures.

Since Boot's, they have been on a total expense cut mode. There seems to be a lot of upper management turnover. Staffing levels keep getting cut, merchandise mix keeps getting cut more and more, though I do find their merchandise mix to be better than CVS, that isn't saying much.

[cjd]

Walgreens has two locations in my town, yet Eckerd closed its second location instead of converting to CVS at the time.

[Super S]

A new thing I am seeing at Walgreens, possibly as a cost saving move, is that the electronic reader boards on the sign out front have been turned off. I have seen this at my local Walgreens, as well as every location I have driven by for about the last month. The boards are LED, and I have no idea how much electricity they use, but it has been at least a month since I have seen one that was turned on.

[storewanderer]

A new thing I am seeing at Walgreens, possibly as a cost saving move, is that the electronic reader boards on the sign out front have been turned off. I have seen this at my local Walgreens, as well as every location I have driven by for about the last month. The boards are LED, and I have no idea how much electricity they use, but it has been at least a month since I have seen one that was turned on.

That is a maintenance issue as there is one I drive by frequently that is still on down in Carson City. It doesn't seem to have its messages updated much; the specials it is advertising are not even current specials. It still advertises COVID Vaccines as well with the same exact message as when those were first being given in 2021, never update for booster etc. There are a couple of these elsewhere in my area and they've been off/broken for months/years.

[Romr123]

yet we're getting a new Walgreens (new build; small footprint compared to their other locations) in a bit of a hole for them a couple miles from us, in an area with heavy CVS and Rite Aid coverage. It may replace a store one mile north/one mile west of the location.

[storewanderer]

Is that new Walgreens a 5k square foot or so model or something somewhat larger?

Before COVID they had something they were calling a Cooper Store which was basically a freestanding fancier looking re-hash of the old freestanding RX Express format they expanded into SoCal with in the 90's. But I haven't heard where any of these have actually opened... there were rumors they would try to relocate some larger freestanding stores into these cheaper/smaller buildings.

I also read Walgreens is closing its Walgreens.com warehouse in Edwardsville, IL, which had 400 employees. This warehouse has been one of the worst online sites I've ever ordered from. The only reason I keep ordering is due to the easy digital coupon linkage ordering from them and that the website is quite reliable at actually billing you for the items that you have ordered (so you don't get derailed on a spend $50 get $15 back offer due to one item being canceled, like CVS.com does so much). I've received orders with items I did not even order (and had no use for; when calling customer service asking if they wanted me to send the items back I was told no), orders missing items, orders with damaged items, orders with the wrong quantity of items... in a lot of cases since the orders were already nearly free, I don't report these issues to them, but sometimes I have reported it to their phone customer service and they always give a refund or re-shipment no questions asked. I've had a couple cases where I ordered a single item and they sent me a case (these cases are little plastic bags with 10 units inside) of the item (small stuff like toothbrushes, etc.) where the warehouse staff must not understand the difference between a single unit and a case.