Boston, MA, 03/26/2014 (usastockreports)- Walgreen Company (NYSE:WAG) one of the largest drugstore chains in the U.S. has announced plans to save between $40 million and $50 million with the closure of up to 76 unprofitable drugstore. The drug store chain has on the other hand declined to specify stores that are up for closure although it has specified they are spread across the country. The closures will be undertaken after first notifying the affected employees as well as carrying relevant procedures and studies.
Stores that are up for closures are those that have seen the opening of other Walgreen Company (NYSE:WAG) locations in the same area as well as those that have seen the depreciation of real estate values in the areas they operate. The move is expected to affect less than 1% of its total locations nationwide; this development is part of Walgreen plan to ensure its stores remain at the best corners.
Despite the closure of the stores, the retail chain store expects to have between 55 and 75 location count while operating 8,210 drugstores nationwide. The contraction of between $240 million and $280 million is expected to be compensated in the third and fourth quarter.
Walgreen’s net income falters
The retail chain also announced that its second quarter net income faltered to $754 million or 76 cents a share, down from a high of 79 cents or $756 million reported for the same period last year. The decline in net income for the period has been attributed to a slower cold flu season and severe weather conditions in the months of January and February that greatly affected profit margins.
The Deerfield drug store chain sales for the period were up by 5.1% clocking at a high of $19.6 billion as a result of an influx in generic drugs that are coming with wider margins from the point of purchase to the final point of sales
The drop in income for the second quarter did not have an effect on Walgreen Company (NYSE:WAG)’s stock in Tuesday session, as they surged by 3.28% closing the day at a high of $66.42