Walgreens’ Future in Chicago: Iconic Drugstore Faces Uncertain Outlook

Walgreens, an iconic American drugstore chain, has faced significant uncertainty since its acquisition by private equity firm Sycamore Partners. Founded over a century ago, Walgreens has long been a staple for many, especially in Chicago, where loyal customers relied on its services for everything from medications to household necessities.

Financial Concerns for Walgreens

In August, Walgreens Boots Alliance reported its $18.8 billion leveraged buyout financed with an alarming 70.9% debt. This level far exceeds the average 41% debt seen in recent private equity acquisitions. Such a model raises concerns about the future stability of Walgreens.

• Debt Level: Walgreens faces $13.33 billion in debt, significantly straining its financial health.
• Private Equity Bankruptcy Rate: Private equity-owned firms contributed to 56% of large corporate bankruptcies in 2024.

Impacts of Private Equity Ownership

Historically, the leveraged buyout model often siphons resources for debt servicing rather than innovation or workforce support. This has proven detrimental for other Sycamore-owned companies. For instance, after acquiring Staples in 2017, Sycamore closed one-third of its stores and enacted significant layoffs.

Moreover, Mike Motz, the CEO responsible for these closures at Staples, now leads Walgreens. His appointment raises questions about the future direction of the drugstore chain.

Recent Developments and Future Outlook

As Walgreens prepares for 2026, troubling developments abound. Ahead of the holiday season, the company announced reductions in employee holiday pay to mitigate costs. Additionally, most of its communications team was dismissed, and offices in downtown Chicago are set to close.

With declining reimbursement rates and increasing health care costs, Walgreens is at a crossroads. The potential for community impact remains significant, as reduced services could hinder access to healthcare for many Americans.

Conclusion

The future for Walgreens in Chicago and beyond is fraught with challenges. If past practices of Sycamore Partners continue, we may see further layoffs and store closures. Walgreens, a beloved institution, may face a pivotal transformation in the coming years.