Walgreens’ Road to Reinvention? written by Alena Easo BBA II & Bhumika Mohanty BBA II

Here is the story of Walgreens, an international brand whose journey has been fraught with both adversity and triumph and fragrant with the goodwill of its consumers globally.

The journey of Walgreens: (Walgreens)
The journey of Walgreens has pioneered its own way to become an household name in pharmacy and wellness by serving millions by a chain of stores. The base-root of Walgreens developed initially in 1901 and with time its digital solutions and e-commerce took a turn in re-shaping the company as a whole. However, about Walgreens product portfolio emphasizes on appealing a larger set of audiences, by positioning it in the market as everything that is convenient under one roof (i.e. healthcare and retailer) which makes the customer rely on this company for their holistic approach.

How Walgreens financial summary looks like:
The history of the company has grown in net sales and gross profit over the years. In 2023, the company produced net sales of $139,081 million and a gross profit of $27,072 million. However, there are notable differences in the net earnings, a marked loss of $3,528 million in 2023 was realized, which thereby increased the operational expenses in addition to market forces that may have been experienced within the company.

Walgreens Boots Alliance (WBA) stock price from 2004 to 2023 is considered varied, with a maximum value of $83.86 in 2015. In the aftermath, there has been a consistent decline until the end of 2023 to $29.85. Its growth between 2004 and 2015 came through retail expansion and acquisition but later got hampered by the intense competition of the year onwards from e-retailers, such as Amazon.

The COVID-19 pandemic has exacerbated these factors, leading to problems up to this day with profitability and calls for strategic restructuring, for example, closing as much as 25% of its stores.

 

Furthermore, as the financial summary depicts, Walgreens is experiencing low profitability and is suffering from a heavy debt burden resulting from huge acquisitions like Alliance Boots, competition from Amazon Pharmacy that operates only through its website, and an excessively high-cost structure to maintain operations due to its sizeable store network. Uncertainty over leadership makes it tough to have a long-term strategy. All these combined with the need for digital transformation have prevented Walgreens from finding sustainable and effective solutions in a competitive marketplace.

 

Company Summary:

Over the years, Walgreens have adopted a strategy primarily driven by growth acquisitions. This approach worked for a while, helping Walgreens expand its footprint across the U.S. and globally. One of their significant moves was the acquisition of Alliance Boots in 2014, for which Walgreens took on $15.3 billion in debt. This decision was indeed to transform Walgreens into a global healthcare leader. Initially, the decision seemed like a strategic move. However, the immediate after results was troubling. Walgreens’ stock performance fluctuated, and operational costs skyrocketed. The company struggled to balance its aggressive expansion with its growing expenses. Following this, Walgreens made another acquisition in 2021, spending $5 billion to acquire Village-MD, a healthcare services provider. This move was part of their effort to shift towards providing in-store healthcare services and align with industry trends. However, rising expenses continued to outpace revenue growth.

Timeline of Walgreens Edition:

With evolving time, there came an evoking timeline in its managerial designation which goes by: 1901 – Charles Rudolph Walgreen : The first person who came up with this evolution is Charles R. Walgreen who founded Walgreens in Chicago. Started his career as a pharmacist, he expanded his knowledge into a single drugstore and later a chain by adding unique offerings like a soda fountain, which surprisingly later became famous for its malted milkshakes.

1939 – Charles R. Walgreen Jr. : After his father’s death, his heir Charles R. Walgreen Jr. took over and led Walgreens through WWII and post-war expansions. Under his leadership, Walgreens continued to grow its number of stores and refined its model.

1963 – Charles R. Walgreen III: Later, Charles R. Walgreen III became CEO and expanded the chain further, modernizing stores and implementing innovations like the “INTERCOM” pharmacy computer system in the 1980s. His tenure marked significant technological progress for the company in whole.

1999 – L. Daniel Jordan: A time which switched up from the comfort zone of family to an outsider, As the first CEO outside the Walgreen family, Jordan focused on growing the company’s presence across the U.S. His leadership helped Walgreens double its locations nationwide

2002 – David Bernauer: Later,Bernauer expanded the company’s online presence and focused on customer loyalty programs. He also initiated key acquisitions, strengthening Walgreens’ presence in new markets

 

2006 – Jeffrey Rein: Rein continued Walgreens’ expansion, acquiring companies like Happy Harry’s and Take Care Health Systems. He stepped down abruptly in 2008, and Alan McNally served briefly as interim CEO.

2015 – Stefano Pessina : Pessina, the Alliance Boots executive chairman, became CEO after the merger, prioritizing cost efficiency and further international growth. He served until 2021, after which he took on the role of executive chairman

2021 – Rosalind Brewer: Brewer was one of the few Black women CEO’s of a Fortune 500 company. Her tenure focused on transforming Walgreens into a healthcare destination. Brewer stepped down in 2023

2023 – Ginger Graham (Current CEO): After Brewer,Ginger Graham took on the role of interim CEO as the company continues its search for a new, permanent leader.

Navigating Challenges and Embracing Digital Transformation

There are ways in which Walgreens can achieve long term growth. This is particularly applicable in the UK where the automating of back-end processes can help eliminate the costs associated with labor and the sale of struggling stores. The franchise operations will be rolled out to medium performers so that operating costs are reduced but the brand is still upheld; hence, the retail store template will be more focused.

However Walgreen’s transitions towards structure shows its flexibility attitude despite having debt structure issues, technological disruption within the market, or churn on leadership. To sum up, due to its focus on digital transformation and forming partnerships, the company is placed in a favorable position to remain competitive in the changing market and in this technological advanced era.