Walgreens will close approximately 1,200 stores as it grapples with growing competition from online retailers and shrinking payments for prescription drugs.

By 2027, nearly one in seven of the company’s current locations will close. Over the next year alone, 500 stores are set to shut down, Walgreens announced on Tuesday.

This move marks a sharp escalation from June, when the struggling retailer revealed plans to close 300 underperforming stores as part of a multi-year optimization strategy led by CEO Tim Wentworth. At that time,

Walgreens disclosed that roughly 25% of its stores were unprofitable and signaled that significant changes were on the horizon.

Walgreens reported stronger-than-expected sales last quarter, with revenue rising 6% year-over-year.

However, the company still posted a $3 billion loss due to a writedown of a Chinese pharmaceutical chain and a home care provider, CareCitrix.

Shares of Walgreens rose nearly 4% in premarket trading, though the stock remains down almost 70% this year.

Drugstore chains like Walgreens, CVS, and Rite Aid face declining profits from prescription sales due to lower reimbursement rates and competition from Amazon.

CVS recently announced 2,900 job cuts as part of a $2 billion cost-saving initiative.

Additionally, drugstores are losing ground to competitors like Target and Dollar General, particularly in selling snacks and household goods.

In May, Walgreens reduced prices on over 1,000 items to attract budget-conscious shoppers.