After Walgreens and Big Lots both previously announced plans to shutter a significant number of stores, the local impact is becoming clearer.

Walgreens

During the Illinois-based pharmacy chain’s Oct. 15 fourth quarter earnings call, executives said they expect to shut down 1,200 locations over the next three years as part of a move to slash $1 billion in costs. That includes 500 store closures in 2025 alone, according to Walgreens.

Of the company’s 8,700-store footprint across the U.S., 1-in-4 locations is considered unprofitable, Walgreens also said.

The company announced the closures in June; however, it did not disclose how many stores the move would affect. At the time, Walgreens said up to 25% of locations could go dark by 2027 and that it was evaluating retail performance.

The chain has not yet specified which stores will close nor how many jobs would be eliminated. A spokesperson for Walgreens told NJBIZ the company doesn’t have any details to share on closures at this time.

In a statement, the media representative said, “Our retail pharmacy business is central to our go-forward business strategy. However, increased regulatory and reimbursement pressures are weighing on our ability to cover the costs associated with rent, staffing, and supply needs. It is never an easy decision to close a store.”

“We know that our stores are important to the communities that we serve, and therefore do everything possible to improve the store performance. When closures are necessary, we will work in partnership with community stakeholders to minimize customer disruptions. We intend to redeploy the majority of our team members from those stores that we close,” the statement said.

Looking ahead

Within New Jersey, the brand has 190-plus locations.

“In fiscal 2025, we are focusing on stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow, and continuing to address reimbursement models to support dispensing margins and preserve patient access for the future,” Walgreens CEO Tim Wentworth commented in the latest earnings release.

He went on to describe fiscal year 2025 as “an important rebasing year” as the company advances its strategy “to drive value creation.”

Wentworth added, “This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term.”

Walgreens’ efforts to reset its business come as more customers head online to fill prescriptions. Drugstore chains also contend with rising prices and a downturn in consumer spending.

Rival chains CVS Health is grappling with another wave of corporate layoffs. Meanwhile, Rite Aid recently emerged from bankruptcy with a whittled-down fleet of 1,300 stores.

Big Lots

Since filing for bankruptcy protection in September, Ohio-headquartered discounter Big Lots has revealed plans to close over 550 of its 1,400 stores – including more than a dozen in New Jersey.

Initially, Big Lots said it expected to close 344 stores, with just one of New Jersey’s 27 locations impacted (Woodbridge). From there, another six local stores were added to the list.

The company also said it would continue to assess its operational footprint and more closures could follow. Since then, a judge for U.S. Bankruptcy Court for the District of Delaware has approved 153 additional closures.

As part of its voluntary Chapter 11 filing, Big Lots said private equity firm Nexus Capital Management will acquire “substantially all” of the chain’s stores and business operations for about $760 million. That sum includes $2.5 million in cash as well as remaining debts and liabilities.

In June, Big Lots expressed “substantial doubt” about its ability to continue as a going concern, citing a pullback in consumer spending due to inflation. As part of a turnaround effort, Big Lots says it is taking steps to reduce costs, improve sales, and enhance its financial flexibility and liquidity.

While the company says its performance has improved, the board of directors conducted a strategic review of alternatives and determined that a sale to Nexus is the best path forward to maximize value and ensure continued operations.

In connection with the court-supervised sale to Nexus, Big Lots said it secured $707.5 million in fresh financing, including $35 million from current lenders, to keep operating and pay employees and vendors.

Unless higher or better offers materialize during the court-supervised auction process, the transaction expects to close during the fourth quarter of 2024.