Walgreens CEO: ‘Turnaround Will Take Time’
For Walgreens Boots Alliance CEO Tim Wentworth, the company’s turnaround process is not a sprint but a marathon.
“We still have substantial work to do here,” he told analysts during the company’s first-quarter earnings call Friday (Jan. 10). “While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model. Our focus is on our balance sheet. Sustained operating cash flows are front and center, and it’s a multiyear process to consistently and reliably deliver that. But we’re executing with urgency.”
While company officials look to stabilize the retail pharmacy, optimize the store footprint and address reimbursement models, elevating the customer experience is underway, Wentworth said on the call.
“We’ve got a lot of things underway inside our front-of-store initiatives, beyond getting to the right number of stores we can invest in properly,” he said. “We’re excited about the fact we’ve revamped our team in terms of analytics, omnichannel and digital experiences, along with our merchandising team. We’re also continuing to work around customer loyalty and as a health and wellness provider to really meet the customer where they are with the things they really want from us.”
Wentworth pointed to digital and virtual check-ins for pharmacy patients that will soon launch in 100 stores, adding virtual care is currently offered in 30 states.
“They don’t have to stand in line and can shop the store while they wait,” he said.
“We also use some concierges at the front of the store to assist customers,” he added. “We’re also working on our own brand merchandise. We want to become a trusted provider of owned brand merchandise, having introduced 60 owned brands in the first quarter.”
The company began its turnaround strategy last year after considering closing a quarter of its stores in early summer. In December, media reports circulated about Walgreens considering a deal to be sold to a private equity firm, but those reports were neither confirmed nor denied.
By the Numbers
On the financial side of its Q1 earnings, Walgreens reported Q1 sales of $39.5 billion, a 7.5% increase from the previous year, although it posted a net loss of $265 million, up from a loss of $67 million in the prior year due to higher operating losses. The U.S. retail pharmacy segment rose 6.6%, driven by a 10.4% rise in pharmacy sales, while retail sales dropped 6.2% due to a weaker flu season and reduced discretionary spending. The international segment grew 10.2%, supported by a favorable currency impact of 3.6%.
Despite the mixed results, company officials continue their focus on restructuring, including plans to close approximately 500 stores during fiscal year 2025.
“We closed about 70 in the first quarter and are on track for another 450 this year,” Wentworth said during the call. “We’ve retained the majority of our pharmacy team members. A smaller footprint will be a healthier one for our company.”
Looking ahead, Walgreens is focused on building a sustainable, long-term strategy, where operational efficiency and customer loyalty play critical roles, Wentworth said. The company is reshaping how it manages its pharmacy services, with an emphasis on better reimbursement models and risk management, ensuring it is compensated for the value it provides.
Additionally, Walgreens is using data and analytics to improve decision-making, streamlining its operations while delivering an improved customer experience. These efforts will continue to evolve as part of a multiyear process that reinforces Walgreens’ commitment to becoming a more customer-driven and health-focused brand, he said.
“We’re executing against long-term priorities,” Wentworth said during the call. “We’re pleased with our first-quarter results, but more work needs to be done. We remain committed to a retail pharmacy-led turnaround, but the turnaround will take time.”
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