Walgreens continues to cut costs with closure of two distribution centers

As it continues to cut costs, Walgreens Boots Alliance will now close two distribution centers in Florida and Connecticut, laying off hundreds of workers in the process.

The Deerfield, Ill.-based retail and pharmacy giant is closing a center in Orlando, Fla., and another in Dayville, Conn. Some 646 workers will lose their jobs as a result, Walgreens spokesperson Marty Maloney said in a statement.

The last day of operations at both facilities is May 17. Affected employees will receive severance as well as separation pay, Maloney confirmed.

“We are focused on aligning our operational structure to best serve our patients and customers,” Maloney said. “This includes an evaluation of our distribution center operations in order to streamline capacities to best support our stores. We are grateful for the many contributions our team members at these facilities have made, and we are committed to supporting them during this transition.”

The retailer began evaluating costs and looking at areas to cut towards the end of last year after several quarters of lackluster performance and a dropping stock price. 

Last October, Walgreens announced that it planned to trim $1 billion in costs, with savings expected to be realized in the second quarter of fiscal 2024, which Walgreens is now in.

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That plan also involves Walgreens cutting non-essential spending and contracted and project work while optimizing the company’s transportation network. Walgreens additionally cut hundreds of roles at its Deerfield corporate headquarters in November. In February, the retailer announced it would close all of its Village MD clinics in Florida, in addition to shuttering six of those clinics in Illinois. 

In January, some reports said the retailer was exploring the potential sale of Shields Health Solutions, the specialty pharmacy business which the retailer acquired three years ago and in which it has a majority stake. Walgreens would not confirm these reports at the time. 

In the past year, the company has also seen a high amount of executive turnover, starting with its former CEO, Roz Brewer, stepping down in September 2023, followed by the departure of a slew of other high-level executives not long after.

In January, the retailer cut its dividend by nearly 50%, to 25 cents per share. Walgreens’ stock has been down 21% this year, trading at about $21 the morning of March 18. 

CVS Health stock is down just 4% over the same period.

The company’s second-quarter earnings is scheduled for March 28.