Walgreens, under the leadership of new CEO Tim Wentworth, is implementing cost-cutting measures to improve its performance. The company has exceeded its target of saving $1 billion in expenses last quarter and has revealed plans to close nearly 14% of its store locations over the next three years. This includes shuttering 1,200 out of 8,700 stores deemed unprofitable, with 500 closures expected in fiscal 2025. Additionally, Walgreens is considering divesting its stake in VillageMD to reduce debt and enhance its financial position.
Addressing the drug reimbursement issue is crucial for Walgreens’ success. While there have been challenges in this area, potential reforms could positively impact the company’s prospects. Despite facing competition from Amazon and Walmart, which are entering the pharmacy delivery space, Walgreens remains focused on its strategic initiatives. The company’s valuation metrics suggest it may be undervalued, offering potential opportunities for investors.
Although there are uncertainties ahead, including the evolving PBM landscape and competitive pressures, Walgreens has various avenues for growth. Investors with a higher risk tolerance may consider exploring a speculative position in the stock. Stay informed about potential investment opportunities by keeping track of market trends and expert recommendations for maximizing returns.
Disclosure: John Mackey, former CEO of Whole Foods Market, which is an Amazon subsidiary, serves as a member of The Motley Fool’s board of directors. Geoffrey Seiler does not hold any positions in the stocks discussed. The Motley Fool holds positions in and recommends both Amazon and Walmart. The Motley Fool adheres to a strict disclosure policy.
