In a move that underscores the challenges facing American businesses under the weight of rampant inflation and rising crime, Walgreens has announced it will shutter 1,200 stores over the next three years. The retail giant, which operates around 8,700 locations nationwide, is aiming to slash $1 billion in costs as it struggles to cope with a toxic economic environment created by poor policy decisions and unchecked crime.
The closures, announced earlier this year but only recently detailed, will see 500 stores close their doors in 2025 alone. For a company that once symbolized convenience for millions of Americans, the move is a stark indication of how far things have deteriorated. Walgreens admitted that one in four of its stores are now unprofitable, a direct consequence of the economic turmoil caused by inflation and other headwinds.
Soaring inflation has hammered consumer spending, forcing shoppers to tighten their belts and think twice about discretionary purchases. “Consumers are being more wary about where their dollars are being spent, and Walgreens’ retail side is struggling more compared to last year,” said Keonhee Kim, an analyst from Morningstar. This squeeze on household budgets, paired with low drug reimbursement rates from insurers, has put Walgreens in a financial bind.
However, it’s not just inflation that is hurting Walgreens and other retailers. The surge in organized retail theft, which exploded during the pandemic and continues to plague stores across the country, has added insult to injury. Walgreens stores have increasingly turned into fortresses, with products locked behind glass to deter thieves. “It’s not a convenient shopping experience with everything locked up,” Kim remarked, noting that this has made shopping at Walgreens an exercise in frustration for many law-abiding customers.
The consequences are clear: Walgreens’ stock has plummeted to near 30-year lows, falling 65% this year alone, making it the worst-performing stock on the S&P 500 index. Investors, however, saw a brief glimmer of hope this week as shares jumped 16% on Tuesday after the company narrowly beat Wall Street’s lowered profit expectations for the fourth quarter. Walgreens reported adjusted earnings of 39 cents per share, slightly above analysts’ predictions.
But make no mistake—this is a company in the midst of a desperate turnaround. CEO Tim Wentworth, who took the reins last year, has begun cutting costs and streamlining operations, including eliminating several mid-level executives. While he remains optimistic about the future, saying, “This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” the path forward is anything but certain.
Walgreens’ challenges reflect larger issues facing the retail industry in America today. The Biden administration’s economic policies, which have fueled inflation, and the lack of decisive action on crime are making it harder for businesses to survive. Walgreens’ decision to close 1,200 stores is just the latest example of how damaging these issues have become. Until these root problems are addressed, Americans should expect more empty storefronts and fewer places to shop in the communities they call home.
