National drugstore giant Walgreens will shutter some 1,200 locations over the next three years as it seeks to stem a $3 billion quarterly loss across its businesses generated by a sluggish U.S. economy.
The company forecast about 500 store closures will come in the current fiscal year and should immediately support adjusted earnings and free cash flow, AP reports.
Walgreens didn’t say where the store closings would take place.
Its shares jumped 5.4 percent to $9.50 in premarket trading on the back of the news, Reuters reports.
“At first blush, (the forecast) looks better than worst-case scenario,” said Leerink Partners analyst Michael Cherny, adding Walgreens continues to be buffeted by macro challenges that did not abate in the quarter.
As a result of recent headwinds, Walgreens’ stock is trading near 30-year lows and down 65 percent this year, making it the worst performer on the S&P 500 index.
New CEO Tim Wentworth has unveiled a series of changes since taking on the top job last year, including the removal of multiple mid-level executives and a $1 billion cost-cutting program.
“This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” said Wentworth in a statement.
The closures were announced in June but the company had not disclosed the number of affected stores at that time.
The Deerfield, Illinois, company had over 8,000 stores in the United States as of Aug. 31 last year.