myclaudialive.files.wordpress.com …  · Web viewThis report demonstrates a profile of Walgreens Boots Alliance. The purpose of this paper is to give an overview of Walgreens and

Overview of Walgreens Boots Alliance Incorporated

Presented to:

Dr. Jie Wang

Submitted By:

Claudia Komperda

Elvia Renteria

Jiaguan Chen

Junzou Lu

Mashrur Haque

Pengru Lyu

Submitted:

December 8, 2017

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Table of Contents

Executive Summary……………………………………………………………………………….3

Introduction………………………………………………………………………………………..4

History……………………………………………………………………………………………..4

Management……………………………………………………………………………………….7

Products and Services Information………………………………………………………...……...8

Competitive Landscape……………………………………………………………………..……..8

Financial Review ……………………………………………………………………………......10

Company Culture…………………………………………………………………………….…..13

Conclusion……………………………………………………………………………………….16

References………………………………………………………………………………………..18

List of Figures

Figure 1: Total Revenue from 2012-

2017………………………………………………………..10

Figure 2: Net Income from 2015-2017…………………………………………………………..11

Figure 3: Assets from 2015-2017………………………………………………………………..12

Figure 4: Liabilities from 2015-2017………………………………………………………….....12

Figure 5: Cash Flow from 2015-2017…………………………………………………………...13

Figure 6: Pharmacist Gender and Ethnicity……………………………………………...………15

Figure 7: Store Assistant Manager Gender and Ethnicity……………………………………….15

Figure 8: Store Manager Gender and Ethnicity………………………………………………….16

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Executive Summary

Purpose of Report

This report demonstrates a profile of Walgreens Boots Alliance. The purpose of this

paper is to give an overview of Walgreens and its current standings, as well as provide

information on its future job opportunities to help a person determine if this company is one they

would want to apply for employment in the future.

Current Standing

Walgreens Boots is currently the second-largest pharmacy store chain, specializing in

health and wellness products, filling prescriptions, and offering photos services and in-store

health clinics. Walgreens generated $118.2 billion in net revenue, increasing .07% from the

previous year. Its company profit declined 2% from $29.8 billion in 2016 to 29.2 billion in 2017.

Stocks peaked at $86.86 in February 2017 and as of December 4, 2017, one share of stock is sold

at at an average of $70.66 with a high price of $71.47. Their fiscal year ends August 31.

Outlook

Walgreens will continue to be as innovative as it has been in the past and meet consumer

expectations for quality service it is known for. It plans to keep incorporating and expanding on

its health service, as well as cultivate growth in world markets as it keeps growing globally.

Walgreen’s merger with Alliance Boots will preserve its values through pharmaceutical

wholesaling and community pharmacy care for more generations to come.

Introduction3

Walgreens has been one of America’s largest pharmacy store chains since the early

1900’s and has become a household name known for its healthcare services and products. This

company is the second-largest drugstore pharmacy chain in USA and the first global pharmacy-

led enterprise operating 13,000 stores in 11 countries. Walgreen’s headquarters are located in

Deerfield, Illinois. This company successfully maintained its name and marketplace by

differentiating itself through its health-care services and a variety of products, providing

exceptional customer service, and creating innovations that help foster its growth.

Company History

Walgreens began as a drugstore on the corner of Bowen Ave and Cottage Grove in

Barrett’s Hotel in 1901. It was created by Charles R. Walgreen Sr. who grew up in Dixon,

Illinois. His first experience working at a drugstore was at Horton’s when he was 16; he was only

working there because he cut the top joint of his middle finger at a shoe factory, which led him to

stop participating in sports. He quit about a year and a half later, but saw an opportunity to

become an entrepreneur in Chicago with a highly competitive drugstore market of 1500

drugstores competing against each other. After working several jobs with Chicago’s top

pharmacists, Walgreen started to question the old-fashioned methods the drugstores executed,

such as lack of innovation in merchandising, no desire to give exceptional customer service, lack

of a unique selection of goods, etc. (Our Past). Walgreen became inspired to open his own

drugstore with the hopes of fulfilling his desires of what a drugstore should be like, and put a

downpayment on his first pharmacy in 1901.Walgreen stuck to his promise and transformed the

poorly lit and merchandised store and incorporated new bright lights, widened aisles, broadened

selection, hired cheerful employees, and improved the quality of pharmacy goods. By 1913, four

Walgreens stores existed, nine in 1916, and 20 stores were built by 1919. The chain and

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customer loyalty was growing fast due to its friendly employees, fair prices, and wholesome

food.

The innovation of the malted milkshake in 1922 was one of factors that

contributed to Walgreens growth from 20 stores in 1919 to 525 stores in

1929. Malted milk drinks used to consist of mixing chocolate syrup, milk

and malt powder until Ivar Coulson decided to add a couple scoops of

vanilla ice cream into

it. The invention

fueled the company’s growth and

popularized the company in media. The

100th store opened in 1926, and Walgreens

Co. started to become a publicly-traded

corporation in 1927, with its stock continuing to rise in price. It also was one of the biggest

newspaper advertisers in Chicago and the first drugstore chain to advertise in the radio in 1931.

After Walgreen died in 1939, the chain was left to Charles Walgreen Jr. to run as president. In

1943, the drugstore opened a nonprofit 6,000 ft drugstore in the Pentagon, which was recognized

by President Eisenhower, and all the profits went to the Pentagon Post Restaurant Council.

Walgreens was one of the first American companies to establish pension plans profit sharing,

with the initial funds for the pensions given by the estate of Walgreen Sr. By 1950, Walgreens

began to build self-service in all its stores, and was the largest self-service retailer in the country

by 1953. It filled its 100 millionth prescription in 1960, doing better than any drug chain during

the time, and entered the Puerto Rico market that same year. Charles Walgreen III became the

company’s president in 1969, and in 1975 Walgreens surpassed $1 billion in sales.

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The company incorporated new innovations in its stores and passed more milestones in the ‘80’s

and ‘90’s, such as installing Intercom computers in 1981 to connect to all pharmacy departments

via satellite, implementing next-day photo finishing in 1982, and installing point-of-sale

scanning to speed checkouts in 1991, along with opening its first drugstore with a drive-thru

pharmacy that same year (Historical Highlights). Walgreens opened its 1000th store, in Chicago

in 1984, its 5000th store in Virginia in 2005, and its 8000th store in in LA in 2012. Their

website, walgreens.com, launched an online pharmacy in 1999, and Charles Walgreen III retired

the same year. Walgreens was the first drugstore chain to offer prescription labels in different

languages in 2002, and nowadays labels can be printed in 14 languages. Walgreens acquired

Happy Harry’s drugstore chain in 2006 and Take Care Health Systems and Option Care in 2007,

which provided a spectrum of specialty pharmacy and home infusion services. It also started

offering in-store health clinics in 2006. The CEO title belonged to David Bernauer until 2006

when Jeff Rein became CEO. He quit in 2008, replaced by Alan G. McNally as Chairman and

Acting CEO. The current CEO of the company is Gregory Wasson as of 2009. In 2014,

Walgreens began its merger with Boots Alliance, which shared

the same values and health care services through pharmaceutical

wholesaling and pharmacy care, by purchasing 55% of the

remaining company. Walgreens is now known as Walgreens

Boots Alliance, headquartered in Chicago.

Management

Walgreens Boots Alliance is being run by a Board of Directors. There are currently 11

individuals on the board. The key executives include: James Skinner, Stefano Pessina, Alexander

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Gourlay, Ornella Barra, and George Fairweather. James Skinner is the Executive Chairman. He

was named Chairman of the Board of Directors in 2012. Skinner previously worked in leadership

positions at McDonald’s. At McDonald’s, Skinner was Vice Chairman, as well as Chief

Executive Officer. In addition, he also served on the board of Hewlett Packard. Stefano Pessina

is serving as the Executive Vice Chairman and Chief Executive Officer. Alexander Gourlay is

the Co-Chief Operating Officer. Gourlay was previously the Executive Vice President of

Walgreens Co. During his tenure, there has been revenue growth of 63.69%. Ornella Barra is the

other Co-Chief Operating Officer. She oversees International Retail, which includes main

business units in Thailand, Norway, The Netherlands, Mexico and Chile. George Fairweather is

an Executive Vice President of WBA. He has been in this position since February 2015.

Fairweather served as WBA’s Principal Accounting Officer from February 2015 to August 2015.

During Fairweather’s tenure, there has only been 14.28% change in revenue growth. As of

August 30, 2017, WBA had a net income of $4.078 million. Cash from operations was $7.25

million. In addition, cash from investing was negative $843 million and cash from financing was

negative $12.93 million.

Products and Services Information

Walgreen’s mission is to be America’s most loved pharmacy-led health, well-being and

beauty retailer. Its purpose is to champion everyone’s right to be happy and healthy. To help

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achieve these goals and build on their legacy of trust, Walgreens is focusing on providing its

customers with simplicity of services, quality and value.

Walgreens specializes in filling prescriptions, health and wellness products, health

information, and photo services. They sell prescription and

non-prescription drugs, as well as general merchandise,

including household items, convenience and fresh foods,

personal care, beauty care, photofinishing and candy. They

provide customers with convenient, omni-channel access to

consumer goods and services, pharmacy, and health and

wellness services in communities across America. Walgreens

offers their products and services through drugstores, as well as through mail, telephone and

online. They also provide specialty pharmacy and respiratory services, and operate retail clinics.

Competitive Landscape

Walgreen has two major competitors among nation wide: CVS Health Corporation and

Rite Aid Corporation. Walgreen's prescription for world domination relies on acquisitions at

home and abroad. It is the nation's top 2 drugstore chain that operates 8,175 stores, mostly

freestanding Walgreens stores in not only all 50 US states (until August 31, 2016), but also the

District of Columbia, the Virgin Islands, and Puerto Rico. Prescription drugs account for about

two-thirds of sales revenue of the company, the rest comes from general merchandise, over-the-

counter medications, cosmetics, and groceries. Most Walgreens stores offer drive-through

pharmacies and one-hour photo processing, and its competitor CVS pharmacy has the similar

service. In 2014, the company fully acquired the Swiss-based Alliance Boots to form Walgreens

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Boots Alliance, of which it is a subsidiary (D&B Hoovers). Walgreens is easy to access, since

there are so many outlet stores among nationwide. Even in those small towns, countrysides,

there will be a Walgreens around the area. Thus, Walgreens are also accessible for the people

who live in further areas. Speaking of the competitors for Walgreens, CVS pharmacy could be

considered as the most threatening rivalry for Walgreens. There is a fun thing has been going

around that for every Walgreens store, there will be a CVS store around it within 200 yards.

However, CVS pharmacy has over 9600 outlet stores in nationwide from the report in 2016. By

far, CVS Pharmacy is currently the largest pharmacy chain in the United States by number of

locations and total prescription revenue and it outscales Walgreens in both store number and

prescription revenue. Also, Rite Aid has 4621 stores in the United States. In the annual report of

Rite Aid in 2016, CVS pharmacy had a $96.4 billion prescription revenue with a 23.4% of the

market share; Walgreens had a $56.8 billion prescription revenue with a 13.8% of the market

share; Rite Aid had a $19.0 billion prescription revenue with a 4.6% of the market share. The gap

between Walgreens and CVS pharmacy seems to be so huge that Walgreens could not get closer;

though on September 2017, Rite Aid accepted Walgreens’ $4.4 billion deal to buy 1,932 Rite

Aid stores, which allows Walgreens to expand the size of the corporation. This could give them

more locations than rival CVS and helps the Walgreens to be able to chasing the steps of CVS

pharmacy.

Financial Review

Walgreens is one of the largest pharma companies in the United States. The main sources

of revenue for the company is the retail pharmacy, but Walgreens also provides the service of

other daily life needs such as daily necessities, snacks, and alcohol and tobacco, etc.

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Since 2007, Walgreens’ stock has been increasing each year. This major performance has

a significant advantage compared to 10 years ago. There was only one downtrend that occured in

2008, when financial turmoil hit the United States’ financial market. The price per share

increased from $44 to $67 as of today. The payment of dividend has been increasing every year

since 2007 from $310 million to $1.563 million as of year 2017; the share owner has earned

more pay back than they expected.

Of all of Walgreens’ stock, 13.6% are currently held by all of the insiders and 62.03% are

held by institutions. In the transition of an insider in last 6 months, 1,825 shares were purchased

and 5,472 shares were sold. The percentage of shares sold is small enough to not to count in the

whole market. The total number of shares owned by the insider is 2,113,385 shares.

● Sales

○ The table below represents the total revenue of Walgreens (in millions):

FIGURE ONE

TOTAL REVENUE FROM 2012-2017

Fiscal Year Total Revenue (in millions)

2012 71,633

2013 72,217

2014 76,392

2015 103,444

2016 117,351

2017 118,214

Between the year 2012 and 2013, the sales increased 0.52%. Between 2016 and 2017, the

sales increased 0.74%. As for the result, the sales of Walgreens does not have a large amount

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increase with time. There is only one year that sales increased by a large amount, which is

between the year 2014 and 2015, with a 35.41% increase. The reason why sales increased is

because the Board of Directors decided to open the international market for Walgreens to retail

pharmacy and wholesale pharmaceutical. From the report by Walgreens, there are over 8,100

stores over 50 states in U.S. The domestic revenue of year 2017 is around 73.85% of the total

revenue.

● Income Statement

○ The table below indicates the net income of Walgreens (in thousands):

FIGURE TWO

NET INCOME FROM 2015-2017

Fiscal Year Net Income (in thousands)

2015 4,220,000

2016 4,173,000

2017 4,078,000

The net income of Walgreens has been steady for past 3 fiscal years. There’s no

large fluctuation of the company, which means that Walgreen’s business performance is

in a smooth process. From the record, the net income for the year 2014 is $1,932,000,

around the time Walgreens opened the stores worldwide. This extended retail can make

the company earn more profit.

● Balance Sheet

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○ Current Assets: (in thousands)

FIGURE THREE

ASSETS FROM 2015-2017

Year Amount

2015 19,657,000

2016 25,883,000

2017 19,753,000

○ Current Liabilities: (in thousands)

FIGURE FOUR

LIABILITIES FROM 2015-2017

Year Amount

2015 16,557,000

2016 17,013,000

2017 18,547,000

Walgreen’s current assets always exceed their current liabilities. This gives the

company the opportunity to pay their short-term debt in an urgent situation, meaning

Walgreens can exchange their assets for cash in a very short time and pay what they have

to pay.

● Cash Flow

FIGURE FIVE

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CASH FLOW FROM 2015-2017

It’s easy for a company to reduce their net income by increased depreciation by reducing

the tax payable in each period, but it is very hard to hide cash that company owned. Even though

the net income of Walgreens is nearly $4 billion, the cash Walgreens earned in the year 2017 is

almost $6 billion. (Free Cash Flow)

Company Culture

Walgreens employs approximately 240,000 people each year. Candidates consist of a

diverse knowledge in background and training, according to their website. To apply for most

positions at Walgreens, an applicant must be at least 18 years of age. An applicant only has to be

16 years or older to work as a service clerk at a store. Walgreens claims that they do not

discriminate with someone’s gender, ethnicity or any disability during a hiring process; they like

to provide every applicant with an equal opportunity.

The skills required to work at Walgreens vary. Throughout the year, the company hires

people for in store positions such as a beauty advisor, health guide, and pharmacist. There are

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also other positions available in their distribution centres and headquarters. Walgreens typically

looks for people who are punctual, have good social skills to interact with customers and have

good work ethic. The company also offers many internship programs for students who wish to

learn more about medicine.

According to Walgreen’s diversity report (2016), 900 members in their distribution

centres have identified themselves as disabled. Furthermore, 1,300 employees have been trained

with customer service skills in store nationwide. The Vice President and Chief Diversity Officer,

Steve Pemberton said, “Through our efforts we have seen that individuals with disabilities can

perform to standard as much as any other team members, across a variety of work settings,”. He

continued, “In the process, we’ve enabled thousands of people with disabilities to build lives

they may not otherwise have been able to, simply because opportunities were not presented to

them.” The same report also broke down the employment demographics in the United States, as

of August 2016, as follows:

➔ Pharmacists

◆ 52.6% Male

◆ 47.4% Female

◆ 26.7% Minorities

◆ 73.3% White

FIGURE SIX

PHARMACIST GENDER AND ETHNICITY

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➔

➔

➔

➔

Assistant Store Manager

◆ 53.3% Male

◆ 46.7% Female

◆ 41% Minorities

◆ 59% White

FIGURE SEVEN

ASSISTANT STORE MANAGER GENDER AND ETHNICITY

➔ Store

Manager

◆ 63.1% Male

◆ 36.9% Female

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◆ 30.4% Minorities

◆ 69.6% White

FIGURE EIGHT

STORE MANAGER GENDER AND ETHNICITY

Walgreens also states that about 45% of their leaders are women, and 35% of their

workforce consists of people of color. The company also provides their employees with several

benefits such as paid time off, the 401K, company paid life insurance, Voluntary Life & Personal

Accident Insurance, health benefits, child care etc.

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Conclusion

Walgreen’s performance in 2017 showed that it still stands as the second largest

drugstore pharmacy in USA and the first global pharmacy-led enterprise. Its global expansion in

international retailing over the past few years greatly improved its profits, and the merger with

Boots Alliance Inc. in 2014 proves its resilience and opportunity for growth. Walgreen Sr.’s

legacy lives on through the way Walgreens constantly offers impeccable service by employees,

creates innovations that appeal to the loyal customer, and fulfills its mission to incorporate health

in every aspect of the company. Walgreens will continue to dominate the drugstore pharmacy

chain market as long it stays true to its objective that Walgreen Sr. implemented in 1901 that has

made it so successful in the past.

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References

1. “Walgreens Boots Alliance Inc. Executives”, Mergent Online,

http://www.mergentonline.com.proxy.cc.uic.edu/companydetail.php?compnumber=1391

2. “Inclusion in Action”, Walgreens Diversity and Inclusion Report 2015/2016,

https://www.walgreens.com/images/adaptive/si/sr/DiversityReport2016.pdf

3. “Walgreens Historical Highlights”, Walgreens,

https://www.walgreens.com/topic/about/press/facts.jsp

4. “Our Past”, Walgreens https://www.walgreens.com/topic/about/history/ourpast.jsp

5. “Company Info”, Walgreens

https://www.walgreens.com/topic/companyhelp/company_help_main.js

6. “Walgreen Co. Company Info”, Hoovers http://www.hoovers.com/company-

information/cs/company-profile.walgreen_co.33a7e29ae5f3996b.html

7. WBA:”Stocks Price Quote for Walgreens Boots Alliance.” Barchart.com

https://www.barchart.com/stocks/quotes/WBA

8. WBA: “Summary for Walgreens Boots Alliance, Inc.” Yahoo! Finance, Yahoo!, 8 Dec.

2017 https://finance.yahoo.com/quote/WBA?p=WBA

9. “Store Count by State.” Walgreens Newsroom, 31 Aug. 2017,

http://news.walgreens.com/fact-sheets/store-count-by-state.htm

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10. “WBA Income Statement, Walgreens Boots Alliance, Inc. Stock.” Yahoo! Finance,

Yahoo!, 8 Dec. 2017

https://finance.yahoo.com/quote/WBA/financials?p=WBA

11. “About Walgreens.” Walgreens Newsroom, Walgreens, http://news.walgreens.com/fact-

sheets/about-walgreens/

12. “Advocate Clinic.” Walgreens

https://www.walgreens.com/topic/pharmacy/healthcare-clinic/advocate-clinic.jsp

13. “WBA | Stocks Income Statement for Walgreens Boots Alliance.” Barchart.com,

https://www.barchart.com/stocks/quotes/WBA/income-statement/annual

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