Walgreens closing 1,200 stores in hopes of a turnaround.

Walgreens will close 1,200 stores over three years, the company announced on Tuesday.

Walgreens plans to close 1,200 stores over the next three years, the pharmacy chain said on Tuesday. It's part of the company's plan for a turnaround, as it faces retail competition and lower prescription payouts.

Chief Executive Tim Wentworth said about a quarter of the company’s stores are unprofitable. Walgreens has been on a $1-billion cost-cutting spree. It's already been shutting some stores, shaking up leadership and renegotiating its deals with insurers.

Walgreens, which also owns the British drugstore chain Boots, reported a net loss of $3 billion in the latest quarter. This was actually better than expected, with sales growing 6%.

Walgreens isn't the only big pharmacy chain attempting a turnaround. Rite Aid last month emerged from bankruptcy; CVS has also closed stores and reportedly weighs a breakup to undo its mergers with the insurance company Aetna and with Caremark, a pharmacy benefits manager.

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The convenience-store part of pharmacy chains has been losing shoppers to Amazon, Walmart, Costco, grocery stores and dollar stores. Many of those rivals also fill prescriptions, competing for pharmacy customers, too.

Pharmacy chains have over-expanded to thousands of locations over the years, signing long-term leases for pricey corner locations. But many shoppers have criticized the quality of the stores, complaining about understaffing and the inaccessibility of items that are locked up to prevent theft. Pharmacies, for their part, have complained about shrinking profits for filling prescriptions, citing dramatic declines in reimbursement rates.

In light of these challenges, CVS and Walgreens have looked for profits elsewhere. They've tried to add primary-care clinics, a project that costs a lot of time and money. The chains have also proposed new payout structures for prescriptions, with Walgreens on Tuesday warning that it would be "willing to walk away from a line of business, if it doesn't make sense."

"I'm very confident that over a two-to three-year period we will have reset the framework for reimbursement discussions," Walgreens CEO Wentworth told investors on Tuesday.

He also added that Walgreens is focusing on adding more store-brand products to its chain. That tactic has been successful for Boots in Britain, though it has not done as well in the U.S. so far. Wentworth also said the chain would work to re-hire workers from stores that will close and added that overall, "Many of our actions across this turnaround will take time."