People walk by a Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City

Pharmacy chain Walgreens has announced plans to close a significant number of underperforming stores following the release of its third-quarter fiscal results, reported by USA Today. The company confirmed that about 25% of its current stores are not aligning with its long-term strategy, prompting this strategic move.

CEO Tim Wentworth discussed the decision in interviews with CNBC and the Wall Street Journal, attributing it to challenges like weaker consumer spending forecasts. The closures are part of a broader effort to enhance profitability amidst evolving market conditions.

While the exact number of closures hasn't been finalized, the process is expected to occur gradually over the next three years. Wentworth assured that efforts would be made to minimize job losses by relocating affected employees within Walgreens' network.

Walgreens currently operates approximately 8,600 stores nationwide. The decision to reduce its store footprint reflects industry-wide challenges highlighted by CBS News, with other pharmacy chains also announcing closures amid financial pressures and shifting consumer preferences.

Analysts note that declining reimbursement rates and rising operational costs are contributing factors. These challenges, compounded by inflationary pressures and increased competition from mass retailers, have prompted strategic reassessments within the pharmacy sector.