Walgreens is to scale back its drugstore growth in an effort to reduce its capital expenditure by about US$500 million (£251.2 million) over the next three financial years.

The US pharmacy chain will reduce expansion from nearly 9 per cent this year to about 6 per cent in 2010 and 5 per cent in 2011. The number of stores to open will be trimmed from 500 this year to 495 next year, 425 in 2010 and 365 in 2011.

“This move allows us to improve both return on invested capital and overall shareholder value,” said Walgreens chairman and chief executive Jeffrey Rein. “At the same time, it gives us the flexibility to invest in our core strategies.”

Walgreens’ decision has led to rating agency Moody’s downgrading its long-term rating for the pharmacy giant. Moody’s said: “Slower comparable store growth is expected given economic pressures on the consumer and increased pricing competition from the discount retailers and grocery chains.”

Moody’s said the slowdown in store growth will improve Walgreens’ profitability, but that improvement will take some time, adding that the challenging economic climate could lead to Walgreens opting for more promotions, which would cut into profitability.

Walgreens has 6,297 stores in 49 states and sales of US$53.8 billion (£27.02 billion).