US drug retailer Walgreens Boots Alliance is set to close around 600 stores over an 18-month period as part of a store optimisation programme.
The store closure programme is part of the company’s $4.375bn acquisition of Rite Aid’s 1,932 stores, three distribution centres and related inventory, for which it received regulatory approval last month.
With the implementation of the programme, the company expects to incur $450m in costs and will be able to realise cost savings of $300m per annum by the end of fiscal 2020.
Walgreens Boots Alliance co-chief operating officer Alexander Gourlay was quoted by Fortune as telling Wall Street analysts on a conference call: “The vast majority being closed are within one mile of another drugstore that we own going forward.”
The acquisition of Rite Aid stores is expected to close by early next year and the integration is set to result in synergies of more than $300m within four years.
In its latest quarterly report, the retailer stated that its total retail sales fell by 3.9%, while comparable retail sales declined by 2.1%.
Earlier, the company completed a programme to improve operational performance in 1,500 stores.
In June, Walgreens Boots proposed to acquire 2,186 stores and related assets from Rite Aid and later revised the transaction to purchase 1,932 stores.
The agreement comes after a deal to acquire Rite Aid fell through in the wake of possible scrutiny from the US Federal Trade Commission (FTC) on the grounds of anti-trust concerns.