Walgreens Is In Transition – A New CEO – Hundreds Of Stores Shuttered

Walgreens Boots Alliance
WBA
is in transformation. Just before announcing the year-end results in October, Tim Wentworth was appointed CEO of the company. Wentworth (64) comes from Cigna
CI
where he headed up Evernorth, the health services platform of that company.

Prior to announcing Wentworth’s appointment there was an interim team headed by Ginger Graham (an independent Board member serving as CEO) and Manmohan Mahajan, who served as interim CFO
CFO
. It is likely that a more stable environment will now develop under the new management. Rosalind Brewer was the former CEO and had stepped down in September. She was previously with Sam’s Club and Starbucks
SBUX
.

During the interim period, the company closed over 150 stores in the U.S. and closed 300 more in the United Kingdom. Some closings may be ascribed to the 2017 acquisition of 192 Rite Aid
RAD
drug stores.

Brewer acknowledged before leaving that a changing consumer sentiment about spending, inflation concerns, and ongoing reimbursement pressure presented challenging headwinds. She missed the opportunity to change the price structure of Walgreens.

The company is laying off 500 people at the Deerfield, IL. headquarters. That is about 10% of the corporate staff. It seems the company cannot shake the COVID-19 drag. It administered just 800,000 vaccines in the third quarter, an 83% drop from last year. While a weaker ‘cough’ season is good for consumers, it hurts Walgreens performance.

Tim Wentworth spoke about Walgreens, highlighting that it is being built on convenience, access, and trust, giving it a unique advantage in today’s healthcare environment. He sees the opportunities to build on the pharmacy’s strength and Walgreens trusted brands to evolve healthcare and the customer experience to deliver better results at a lower cost.

Wentworth cited an incident where an employee delivered a critical prescription to his mother in Rochester, New York. He pointed out the incident since it showed the commitment of the pharmacist and associate to quickly and cheerfully help his mother. That is the service philosophy he would like to leverage.

Ginger Graham, the interim CEO, spoke at the annual investor’s meeting. She cited that Walgreens dispensed over 1 billion prescriptions annually, clearly making it a key player in healthcare delivery. 78% of Americans live within 5 miles of a Walgreens or a Duane Reed store, and 58% of us are likely to visit a local pharmacy as the first step for a nonemergency health need. Trusted brands, a deep community commitment, and convenience form the foundation of Walgreen’s pharmacy business and platform for growth.

POSTSCRIPT: While Walgreens has been well represented in cities I have lived in, I have always found that there was too much merchandise to choose from in its stores. It was sometimes an effort to choose the right item. Strategic rightsizing of the merchandise assortment can lead to a better customer experience without a loss of sales. At the same time, Walgreens new leadership must seek a partner that will take the Boots operation off its hands. While some companies do well globally, others, like Walgreen’s, do better domestically. That focus would help the new leadership team. The future prospects sound exciting.