Dive Brief:
- Walgreens Boots Alliance will close an e-commerce distribution center in Edwardsville, Illinois, and lay off 393 employees, according to a June 29 Worker Adjustment and Retraining Notification notice.
- Layoffs will occur on or around Aug. 28, according to the notice. Walgreens said it planned to give affected employees a 60-day notice, adding that it will provide laid off employees with on-site career fair opportunities and outplacement services.
- Walgreens said in the letter it wants to align its operations to best serve its customers and patients, including how the company uses its store network to ship orders to their homes. The company did not respond to a request for comment.
Walgreens shuttering Edwardsville distribution center
Dive Insight:
Walgreens' notice came a month after the company announced a layoff of 10% of its corporate workforce, according to sister publication Healthcare Dive. The company provided similar explanations for that workforce reduction and its Edwardsville distribution center layoffs: It's aiming to streamline its operations as it becomes a consumer-centric healthcare business.
The company has struggled this year, posting an operating loss of nearly $500 million for the quarter ending May 31, as it wrestles with lower demand for COVID-related services and more caution from consumers on spending. To turn its results around, Walgreens is targeting $4.1 billion in cost savings by fiscal year 2024.
"We have the right strategy," CEO Roz Brewer said on a June earnings call. "We are driving good progress across each of our strategic priorities and we are taking appropriate measures to account for the recent macroeconomic challenges and uncertainty."
Walgreens' supply chain operations are poised to play a big role in its overhaul, even with the closure of the Edwardsville facility. It announced the opening of its ninth automated micro-fulfillment center to fill prescriptions and reduce pharmacist workloads earlier this year. These centers, which are now supporting more than 40% of the company's store footprint, will help it reduce working capital costs.
"Our pharmacy of the future operating model will drive significant savings," CFO James Kehoe said on the call. "We're optimizing the model through our micro-fulfillment centers, tech-enabled centralization of in-store activities and telepharmacy solutions."
