Walgreens is reducing its U.S. workforce by more than 600 employees in the wake of its purchase by private equity firm Sycamore Partners, company letters show. The largest single-state impact will be in Illinois, where 469 roles are being cut. An additional 159 positions in Texas are slated for elimination in connection with the planned closure of a distribution center there.
The company did not immediately respond to a request for comment on the moves. Walgreens was taken private last year in a roughly $10 billion deal after a period of operational missteps and margin pressure from lower-priced competitors such as Amazon and Walmart.
Sycamore, which specializes in retail and consumer investments, is pursuing several cost-reduction measures as it restructures the business. Among the changes the private equity owner is implementing are staff reductions and the removal of paid holidays for some employees. The firm is also aiming to bolster store revenue by expanding product assortments to include items such as electronic cigarettes.
Sycamore has a history of acquiring and restructuring distressed retail chains. The firms prior investments have included brands such as Staples, Talbots and Nine West. In the present case, the new owners actions are focused on lowering costs and adjusting merchandising to try to improve sales performance at Walgreens stores.
Context and operational details
The job reductions are concentrated in distribution and regional operations, with a specific distribution center in Texas identified as part of the closures. In Illinois, the cuts amount to nearly 470 positions. Together, these actions account for the more than 600 roles that Walgreens is eliminating across the U.S.
Next steps
Sycamores plan combines head-count reductions, benefit changes for some workers, and changes to in-store product mixes. The company has cited the need to cut costs and drive store-level sales as the rationale for the adjustments.