Walgreens could 'aggressively' cut costs if privately owned, analyst says

Core Viewpoint - Walgreens Boots Alliance Inc. is in discussions to be acquired by private equity firm Sycamore Partners, which could provide the company with greater flexibility to implement aggressive cost-cutting measures to address ongoing industry challenges [1][2]. Company Summary - The potential acquisition by Sycamore Partners may allow Walgreens to make significant changes to its business model, particularly in response to declining pharmacy operating margins and increased competition from online retailers [2]. - Walgreens has been experiencing a substantial decline in its stock price, down approximately 60% year-to-date, leading to a "hold" opinion from analysts [3]. - The company is reportedly in talks to finalize a deal by early next year, while also exploring other potential buyers [4]. - Walgreens is currently undergoing operational revamps under new leadership due to profitability challenges and declining margins [5]. - In October, Walgreens announced plans to close at least 1,200 stores over the next three years as part of a strategy to eliminate underperforming locations in the U.S. [6]. - The retail pharmacy business remains central to Walgreens' strategy, but the company faces increased regulatory and reimbursement pressures that impact its operational costs [7]. Industry Summary - The pharmacy industry is facing significant challenges, with analysts predicting further closures as companies attempt to rightsize their operations [7]. - There are approximately 60,000 retail pharmacies in the U.S., but industry experts suggest that the optimal number may be closer to 35,000 to 40,000 [8].