Walgreens will close about 600 stores, mostly Rite Aid locations, beginning next spring as it starts integrating stores purchased from the rival into its own fleet of some 8,100 locations.
The closures will take place over an 18-month period. The effort will cost $450 million, but the resulting cost savings will yield $300 million annually by the end of fiscal 2020, Walgreens Alliance Boots CFO George Fairweather said on an earnings call this morning.
The stores to close will be mostly Rite Aids but could include some Walgreens, according to a company spokeswoman. Walgreens is looking to close stores within a mile of another Walgreens or Rite Aid site.
Walgreens Boots Alliance, which received hard-won regulatory approval last month to purchase 1,932 Rite Aid stores and other assets for $4.375 billion, is buying the locations in phases. The first few were acquired in the past week and the remaining will be purchased by spring of 2018, according to Fairweather.
The remaining Rite Aid stores will be re-branded as Walgreens over the next three years. Walgreens will shell out $750 million on the rebranding, plus an additional $500 million on Rite Aid store conversions and capital expenses.