Walgreens Boots Alliance CEO Sounds the Alarm

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Walgreens Boots Alliance CEO Sounds the Alarm

By Tim Binder - 04/02/2019
Stefano Pessina

Walgreens Boots Alliance expressed an urgency to change as the company announced the financial results for its second quarter of fiscal 2019.

Said chief executive officer Stefano Pessina in an April 2 news release: “The market challenges and macro trends we have been discussing for some time accelerated, resulting in the most difficult quarter we have had since the formation of Walgreens Boots Alliance. ... We are going to be more aggressive in our response to these rapidly shifting trends. 

“We are focusing on our operational strengths and addressing weaknesses, making a number of senior appointments to bring change and accelerating the digitalization and transformation of our business. 

“This will include expediting the execution of our partnership initiatives, fully developing our in-store neighborhood health destinations, reimagining our front-end retail offering, optimizing our store footprint and increasing the annual savings goal of our transformational cost management program from in excess of $1 billion to more than $1.5 billion.

“As a result of these actions, our business model will deliver improved performance in fiscal 2020, positioning us for mid- to high-single-digit growth in adjusted [earnings per share] in the following years.”

For WBA’s Retail Pharmacy USA division (i.e., Walgreens), overall second-quarter sales were $26.3 billion, a 7.3% increase over 2018. 

But while retail sales increased 1.3%, comparable retail sales were down 3.8%. The reason? Walgreens said it was primarily due to a comparatively weak cough, cold and flu season, continued de-emphasis of select products such as tobacco, and a decline in sales of seasonal merchandise.

Pharmacy sales, which accounted for 71.9% of the division’s sales in the quarter, increased 9.8%.