Walgreens Boots Alliance announced plans to close 1,200 stores over the next three years, with 500 of those closures happening in 2025, the company said during an earnings call on Tuesday. 

CEO Tim Wentworth emphasized the company's focus on "stabilizing" its retail pharmacy business by reducing operating costs, improving cash flow, and adjusting reimbursement models to support dispensing margins. Wentworth noted that 6,000 of Walgreens' 8,000+ stores are profitable, while the underperforming stores will be shuttered.

"Fiscal 2025 will be an important rebasing year as we advance our strategy to drive value creation," Wentworth said. "This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term."

Walgreens did not disclose the locations of the closing stores but confirmed they will all be in the U.S. The company said it will work to find new roles within Walgreens for employees affected by the store closures.

This announcement follows other recent cutbacks, including plans to close a "significant number" of underperforming U.S. stores and reduce its stake in the VillageMD primary care clinic concept. Walgreens has also made hundreds of corporate job cuts over the past year.

Wentworth stressed Walgreens' plan to "reorient to its legacy strength as a retail pharmacy-led company," including a focus on expanding private-label brands, especially in health and wellness categories. The company launched over 300 new own-brand products this year and expects to launch another 300 in 2025.

Walgreens' U.S. comparable retail sales declined 1.7% in the latest quarter, which the company attributed to challenges in non-essential categories. However, retail adjusted gross margin improved year-over-year, driven by a shift towards health and wellness products, though partially offset by higher shrinkage.

Despite the quarterly net loss of $3 billion, Walgreens reported better-than-expected adjusted earnings per share and quarterly revenue, sending the stock up on Tuesday.