Why Is Walgreens Losing Money Amidst Pandemic and Economic Turmoil?

Walgreens, one of the largest pharmacy retail chains in the United States, is currently facing significant financial challenges, as evidenced by the departure of its CEO, Rosalind Brewer. As the company's parent company Walgreens Boots Alliance announced on September 1, 2023, Brewer is stepping down, and Ginger Graham, the Lead Independent Director, has been appointed as the interim CEO.

Leadership Changes and Turbulent Period

The leadership changes come at a critical time for Walgreens, which has seen its stock decline by 32% this year. Brewer, who was appointed CEO in March 2021 during the height of the COVID-19 pandemic, played a crucial role in managing the rollout of vaccines across Walgreens pharmacies nationwide. Under her guidance, the company delivered over 70 million vaccine shots, made strategic acquisitions, and implemented cost-saving measures.

Challenges and Criticisms

Despite the efforts to stabilize the business, Walgreens continues to face significant challenges. One of the key criticisms is the business model that may not be aligned with current market conditions. Many customers, including myself, have had negative experiences and subsequently closed their accounts with the company. The high costs associated with shopping at Walgreens, especially in areas with nearby competitors, have led to a significant loss of customer base.

Accountability and Transparency

The recent leadership change raises questions about the overall financial health of the company. It is challenging to determine the exact state of Walgreens' finances without access to the internal records. My accounting professor once taught me the adage, 'Figures lie, and liars figure.' This underscores the importance of transparency and access to real financial data.

Customer Experiences and Concerns

Customers share their discontent with Walgreens, citing high prices and in-store shopping policies. For instance, in my area, Walgreens is the most expensive drug store, and with several competing stores nearby, I never shop there. The company's new policy of penalizing theft by such a modest amount as $1000 may inadvertently encourage more theft, as it fails to deter such actions effectively. As a result, more stores are closing, especially in inner-city areas, and honest customers are being forced to shoulder the burden.

Conclusion

The departure of Rosalind Brewer highlights the challenges Walgreens is facing. While the company had promising initiatives like the vaccine rollout, the ongoing financial struggles and customer dissatisfaction suggest a need for a more comprehensive and holistic approach to address these issues.

For now, Walgreens must focus on regaining the trust of its customers and ensuring transparency in its financial dealings. Only then can the company hope to turn its fortunes around and deliver sustained success in the highly competitive pharmacy industry.