Walgreens to close 1,200 US stores as chain attempts to steady operations at home

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By TOM MURPHY

Walgreens will close about 1,200 locations over the next three years as the drugstore chain seeks to turnaround a struggling U.S. business that contributed to a $3 billion quarterly loss.

The company said Tuesday that about 500 store closures will come in the current fiscal year and should immediately support adjusted earnings and free cash flow. Walgreens didn’t say where the store closings would take place.

Walgreens operates about 8,500 stores in the United States and a few thousand overseas. All of the stores that will be closed are in the United States.

Walgreens Boots Alliance Inc. leaders said in late June that they were finalizing a turnaround plan for its U.S. business, and that push could result in the closing of hundreds of underperforming stores.

The plan announced Tuesday includes the closing of 300 stores that had been approved under a previous cost-cutting plan.

Walgreens CEO Tim Wentworth said in a statement that fiscal 2025, which began last month, will be an important “rebasing year” for the drugstore chain.

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

Walgreens, like its competitors, has been struggling for years with tight reimbursement for the prescriptions it sells as well as other challenges like rising costs to operate its stores. Plus drugstore chains have been dealing with more competition from online retail giant Amazon and Walmart and Target.

Rival CVS Health Corp. is wrapping up a three-year plan to close 900 stores. Another major chain, Rite Aid Corp., emerged from a bankruptcy reorganization earlier this year after whittling its store count down to about 1,300 locations.

Walgreens also has been backing away from a plan to add primary care clinics next to some if its stores after launching an aggressive expansion under previous CEO Rosalind Brewer.

The Deerfield, Illinois, company said in August that it was reviewing its U.S. healthcare business, and it might sell all or part of its VillageMD clinic business. That announcement came less than two years after the company said it would spend billions to expand the business.

The company started 2024 by cutting the dividend it pays shareholders to get more cash to grow its business. The drugstore chain then slashed its forecast for fiscal 2024 in June.

Walgreens said Tuesday that its net loss swelled to more than $3 billion in the final quarter of 2024. The company said a softer U.S. retail and pharmacy performance hurt. It also booked some hefty charges tied to opioid litigation settlements the company had recognized in previous quarters and an equity investment in China.

The performance topped Wall Street expectations. Analysts expect, on average, earnings of 36 cents per share on $35.75 billion in revenue in the fiscal fourth quarter, according to FactSet.

The company also said it expects adjusted earnings in the new fiscal year to fall between $1.40 and $1.80 per share, with growth in its U.S. healthcare and international businesses countering the U.S. retail pharmacy decline.

For the fiscal 2025, analysts expect adjusted earnings of $1.72 per share.

Leerink Partners analyst Michael Cherny said in a research note the company’s fourth-quarter performance and 2025 forecast were not as bad as they could have been. But the information released Tuesday “does not answer any of the big questions surrounding the (Walgreens Boots Alliance) story and the improved operating path forward under still new CEO Tim Wentworth.”

Walgreens shares rose almost 4% Tuesday before the opening bell.

The stock had shed nearly two thirds of their value so far this year, falling to $9 as of Monday’s close.

Today in History: October 15, #MeToo movement goes viral

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Today is Tuesday, Oct. 15, the 289th day of 2024. There are 77 days left in the year.

Today in history:

On Oct. 15, 2017, actress and activist Alyssa Milano tweeted that women who had been sexually harassed or assaulted should write “Me too” as a status. Within hours, tens of thousands had taken up the #MeToo hashtag (using a phrase that had been introduced a decade earlier by social activist Tarana Burke).

Also on this date:

In 1815, Napoleon Bonaparte, the deposed French emperor, arrived on the British-ruled South Atlantic island of St. Helena, where he spent the last 5 1/2 years of his life in exile.

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Nobel Peace Prize given to Japanese organization Nihon Hidankyo for its work against nuclear weapons

In 1945, the former premier of Vichy France, Pierre Laval, was executed for treason.

In 1946, Nazi war criminal Hermann Goering (GEH’-reeng) fatally poisoned himself hours before he was to have been executed.

In 1954, Hurricane Hazel made landfall on the Carolina coast as a Category 4 storm; Hazel was blamed for about 1,000 deaths in the Caribbean, 95 in the U.S. and 81 in Canada.

In 1976, the first debate of its kind took place between vice-presidential nominees, Democrat Walter F. Mondale and Republican Bob Dole faced off in Houston.

In 1989, Wayne Gretzky of the Los Angeles Kings broke Gordie Howe’s all-time NHL scoring record in a game against his former team, the Edmonton Oilers.

In 1991, despite sexual harassment allegations by Anita Hill, the Senate narrowly confirmed the nomination of Clarence Thomas to the U.S. Supreme Court, 52-48.

In 1997, British Royal Air Force pilot Andy Green twice drove a jet-powered car in the Nevada desert faster than the speed of sound, officially shattering the world’s land-speed record.

In 2003, eleven people were killed when a Staten Island ferry slammed into a maintenance pier. (The ferry’s pilot, who had blacked out at the controls, later pleaded guilty to eleven counts of manslaughter.)

Today’s Birthdays:

Actor Linda Lavin is 87.
Baseball Hall of Famer Jim Palmer is 79.
Musician Richard Carpenter is 78.
Film director Mira Nair is 67.
Britain’s Duchess of York, Sarah Ferguson, is 65.
Chef Emeril Lagasse (EM’-ur-ul leh-GAH’-see) is 65.
Actor Dominic West is 55.
R&B singer Ginuwine (JIHN’-yoo-wyn) is 54.
Singer-TV personality Keyshia Cole is 43.
Actor Bailee Madison is 25.

Shooting in St. Paul’s North End is third homicide in 4 days in city

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A man was shot in St. Paul Monday night, marking the third homicide in four days in the city.

The incidents appear unrelated, said Sgt. Mike Ernster, a police spokesman.

Police were notified about Monday’s shooting just before 9:30 p.m. when a 911 caller reported a man was shot at Jackson Street and Wheelock Parkway.

Officers found a man with gunshot injuries on the ground and provided first aid until St. Paul Fire Department medics took over and transported him to Regions Hospital, according to Ernster. The man was pronounced dead at the hospital soon after.

No one was under arrest as of early Tuesday morning and investigators asked anyone with information to call them at 651-266-5650.

The homicide was the 23rd in St. Paul and, despite the recent violence, there have been fewer killings this year. There were 27 homicides at this time last year in St. Paul.

Monday night’s shooting comes on the heels of another deadly shooting in the North End, just over half a mile away. On Saturday about 10 p.m., a man was found shot near Woodbridge Street and Wheelock Parkway. Police said they continue to investigate; no one has been arrested.

On Friday about 5:30 p.m., a man was stabbed in a Lowertown gas station parking lot. Police say that it appeared to be the result of an altercation between two men inside the gas station.

“There is no correlation that we found so far that connects any of them,” Ernster said of the three homicides.

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Noah Feldman: The problem with banning legacy admissions

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California recently prohibited its private colleges from using an applicant’s legacy status — that is, whether other family members attended the school — in admissions decisions. Maryland passed a similar law earlier this year, and other states ban the practice for public colleges. Other states are considering similar bans.

On the surface, this all sounds perfectly reasonable. Just about the only argument in favor of legacy admissions is that the practice draws increased donations by building alumni loyalty.

But these laws must be seen in the broader social context: as part of a new trend of attacks on universities’ independence coming from the right and left alike.

To be clear, I’m not defending legacy admissions in principle. There are good reasons why scores of U.S. colleges have voluntarily ended the practice since 2015. Most of the other 500-plus universities should probably follow suit if they can afford to, law or no law.

The problem with the California ban is that it is the mirror image of the lawsuits that gave the Supreme Court the opportunity to strike down diversity-based racial preferences in admissions. That effort, led by conservatives, represented a concerted push to limit how even private universities could choose their students. And such lawsuits are not finished — far from it. The organization that led the lawsuits, Students for Fair Admissions, has promised (or threatened, depending on your point of view) to keep litigating.

The threat of litigation matters because, as I write these words, private college admissions officers are trying to figure out how to comply with the Supreme Court’s ruling that they can’t consider race in pursuit of diversity while still admitting student bodies that in some way reflect national demographics.

The upshot is that we now have government beginning to tell private universities whom they can admit. That’s not the state’s business, any more than it can dictate what they teach. The First Amendment should protect both rights equally. Private universities nationwide should start thinking hard about the constitutional arguments they will have to make to defend their independence from the state.

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Consider: If a ban on legacy admissions is lawful, a legislature could pass a law saying that private colleges must admit based only on SAT scores and grades, not extracurricular activities, essays or geography. Or the law could say private colleges may not admit based on selective criteria at all but must admit everyone. A legislature could mandate that colleges admit the top 5% of the class from all public high schools in the state. Any of these restrictions would be an example of state overreach and would fundamentally disrupt schools’ educational mission, which is to educate the students they choose in the way they see fit.

To fight back, the universities can argue in court that they have a First Amendment right to expressive association with the students they choose to admit. Such a right would trump state legislation unless the state could show that it had a compelling interest in the law and had narrowly tailored the law to achieving that interest — a difficult standard to satisfy.

The doctrine of expressive association is why private clubs like the Boy Scouts, which won the right in a Supreme Court case, may choose whom they do or don’t want to have as members. To win on an expressive association claim, the organization burdened by the law must be prepared to say that its choice of whom to associate with affects its ability to express its values and its mission.

It might feel distasteful for colleges to say that associating with legacy students is part of how they express their educational ideals. If so, then California’s private colleges may choose not to challenge this new law. Such a decision, however, will contribute to the perception among legislatures that it’s open season to try to wrest control over private college admissions. The payoff in political gamesmanship may well be too appealing for state legislatures to hold back.

Short of a direct challenge on the constitutionality of the California law, what’s needed is a clear statement made collectively by private universities all over the country that admissions decisions are at the core of their expressive mission. Such a statement could be made without specifically defending legacy admissions.

No private college or university would tolerate a state or federal law that told them what to teach. That would be an obvious First Amendment violation. Whom to teach is comparably fundamental to the question of what to teach.

Banning legacy admissions has an instinctive appeal. But the underlying issue is the independence of universities from coercive state control. In a moment of intense political focus on university life, that independence could not be more important.

Noah Feldman is a Bloomberg Opinion columnist. A professor of law at Harvard University, he is author, most recently, of “To Be a Jew Today: A New Guide to God, Israel, and the Jewish People.”