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Retailers close stores. But some closings should alarm consumers and investors more.
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Walgreens Boots Alliance. The pharmacy chain announced 150 US closures this year.
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Walgreens cut its yearly profit projection in its third quarter earnings report due to lower Covid-19 vaccination and testing volumes.
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Since the Biden Administration discontinued the national pandemic response in April, that appears normal. Covid deaths and hospitalizations have decreased since 2020.
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Walgreens also warned of a weaker economy than expected. Consumers are cutting back due to inflation, government stimulus cuts, and student loan obligations.
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“We have seen shifting market trends that have customers prioritizing value in response to a more uncertain and challenging financial environment,” CEO told analysts during a conference call.
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All stores have said that. Consumers are buying less "discretionary" things like clothes, electronics, and homes. Target Corporation, Best Buy Company Inc., and Macy's Inc. will have a terrible year.
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Walgreens is neither an electronics nor department shop. It sells no fancy clothes or widescreen TVs. Walgreens, a pharmacy business, supplies essentials that are claimed to be inflation-resistant.
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Thus, Walgreens' view on consumer demand should warn merchants that no one is exempt from a deeper economic recession than projected.
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Walgreens has aggressively changed its strategy from a pandemic-fueled growth corporation to a cost-cutting store that returns cash to stockholders.
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150 store closures may be the start. From $3.5 billion to $4.1 billion, the corporation wants to cut $800 million from its balance sheet this year. The chain indicated there is a “robust pipeline of additional opportunities” in its investor presentation, which was ominous.
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Walgreens cut corporate personnel and store hours. Walgreens reduced hours at 500 shops throughout the quarter, totaling 1,100. That's merely 12% of the company's almost 9,000 US locations.
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