Walgreens announced plans to shutter approximately 1,200 stores by 2027 as it faces mounting competition from online retailers and shrinking prescription drug payments. In the next year alone, 500 stores will close, signaling a significant step in the company’s ongoing optimization strategy led by CEO Tim Wentworth.

This announcement follows the closure of 300 underperforming locations earlier this year after Walgreens revealed that 25% of its stores were unprofitable. Despite a 6% year-over-year revenue increase last quarter, the company reported a $3 billion loss due to write-downs involving a Chinese pharmaceutical chain and home care provider CareCitrix.

The drugstore sector continues to struggle with declining profits from prescription sales amid competition from Amazon and discount retailers like Dollar General. CVS recently announced 2,900 job cuts in response to financial pressures, and Walgreens has reduced prices on over 1,000 items to attract budget-conscious shoppers.

Shares of Walgreens rose nearly 4% in premarket trading after the announcement, but the stock remains down by nearly 70% this year.