Continuing its cost-cutting push, Walgreens Boots Alliance is closing two distribution centers in Florida and Connecticut and laying off hundreds of workers.
The Deerfield-based retail, pharmacy and healthcare giant is closing a center in Orlando, Fla., where 324 workers will be laid off, and another in Dayville, Conn., where 322 employees will lose their jobs, Walgreens spokesperson Marty Maloney said in a statement.
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The last day of operations at both facilities is May 17, and affected employees will receive severance and additional separation pay, he said.
“We are focused on aligning our operational structure to best serve our patients and customers. This includes an evaluation of our distribution center operations in order to streamline capacities to best support our stores,” Maloney said. “We are grateful for the many contributions our team members at these facilities have made and we are committed to supporting them during this transition.”
Walgreens began minimizing costs at the end of last year after several quarters of lackluster performance and a dropping stock price as it struggles to fend off pressures on its traditional pharmacy and retail businesses as well as stand up an entirely new healthcare delivery business.
The company said last October that it was seeking to trim $1 billion in costs, with savings expected to be realized in the second quarter of fiscal 2024, which Walgreens is in. The company plans to release second-quarter earnings March 28.
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Aside from distribution center closures and associated layoffs, Walgreens cut hundreds of roles at its Deerfield corporate headquarters, reduced nonessential spending and contracted and project work, and optimized its transportation network. Other cost-saving strategies include closing unprofitable stores or reducing store hours in locations that can accommodate it.
Cash flow problems hit a critical point in January, when the company cut its dividend by nearly 50%, to 25 cents per share. Walgreens’ stock is down 21% this year, trading at about $21 the morning of March 18. Meanwhile, CVS Health stock is down just 4% over the same time period.
This story first appeared in Crain's Chicago Business.