Walgreens announced plans on Thursday to close a “significant” number of its underperforming stores across the U.S. This decision is a response to ongoing profitability challenges and declining margins, and it marks a major step in the company’s multi-year footprint optimization program.

While Walgreens did not specify the exact number of stores that will be affected out of its more than 8,700 locations, CEO Tim Wentworth indicated to The Wall Street Journal that a “meaningful percent” of underperforming stores would be shut down. This strategic move aims to streamline operations and focus on more profitable areas of the business.

The announcement had an immediate impact on Walgreens shares, which fell in pre-market trading on Thursday. Over the past year, Walgreens shares have dropped more than 45%. Wentworth acknowledged the tough operating environment, citing persistent pressures on U.S. consumers and recent marketplace dynamics that have negatively impacted pharmacy margins.

In the most recent quarter, sales at stores open for at least a year fell by 2.3% compared to the same period last year. The company attributed this decline to a challenging retail environment. Additionally, the retail margin was hit by increased promotional activity and higher shrink levels, which refers to the loss of inventory from issues such as theft.

Walgreens has adjusted its fiscal 2024 full-year earnings forecast, now expecting adjusted earnings of $2.80 to $2.95 per share, down from the previous estimate of $3.20 to $3.35 per share. This revision reflects the difficult trends in the pharmacy industry and a tougher-than-expected consumer environment.

Despite these challenges, Wentworth noted that there were solid performances in Walgreens’ international and U.S. healthcare segments. However, the overall results and outlook of the company have been negatively impacted by the broader headwinds in the industry.

“Informed by our strategic review, we are focused on improving our core business: retail pharmacy, which is central to the future of healthcare,” Wentworth stated. “We are addressing critical issues with urgency and working to unlock opportunities for growth.”