The pharmaceutical giant Walgreens is set to close approximately 2,150 of its 8,600 US locations as part of a vast restructuring effort. This wave of closures, covering about 25% of its domestic stores, comes as the company grapples with many economic and competitive challenges that have pressure-tested its business model in recent years.

CEO Tim Wentworth, in a recent interview with the Wall Street Journal, attributed the closures primarily to unprofitability. Walgreens has faced significant hurdles, such as increased theft and the proximity of its stores, which cannibalize sales—additionally, the ongoing surge in shoplifting since the pandemic has spurred the need for operational streamlining.

Walgreens and its counterparts, CVS and Rite Aid, have been caught in the crosswinds of rapidly evolving market dynamics, with fierce competition from online retailers—most notably Amazon—exacerbating their woes. The traditional pharmacy chains have also been hit hard by falling reimbursement rates for prescription drugs, a trend driven by the negotiating leverage of pharmacy benefit managers (PBMs), which have squeezed margins across the industry.