Walgreens Laying Off 10% of Corporate Workforce
Last week, Walgreens Boots Alliance, Inc. revealed it was eliminating 504 corporate jobs — mostly at its Deerfield, Ill., headquarters or its Chicago office. The layoffs represent about 10% of drug store chain’s corporate workforce.
Spokesman Marty Maloney confirmed that none of these roles are based at its stores, micro-fulfillment centers or call centers.He said that all affected employees will have outplacement support.
[Read more: "Walmart Cutting Hundreds of Jobs Throughout E-Commerce Fulfillment Centers"]
Prior to the layoffs, Walgreen asked a U.S. judge to vacate an arbitrator's award of more than $642 million to Humana Health Plan Inc. in a drug-pricing dispute, calling the "staggering" sum the result of a "miscarriage of justice."
The national retail pharmacy giant has also been dealing with opioid claims. Although the company has denied liability in regard to allegations of its role in the opioid crisis, Walgreens reached an opioid settlement with the state of West Virginia in January for $83 million. Earlier this month, it settled with San Francisco, agreeing to pay the city $230 million over its sales of opioids. The Kroger Co. and Rite Aid are among other companies that are accused of opioid prescription misuse.
CEO Rosalind Brewer said in a message to employees, obtained by the Sun-Times, that the layoffs are among a series of steps that the company is taking “to drive sustainable cost savings to help fuel investments for future growth.” Brewer made no reference to legal matters.
She did, however, cite other cost-saving measures that Walgreens has implemented, such as “consolidating our Deerfield building office space, reducing consultant and contractor spending, eliminating nonessential projects, minimizing travel, and canceling some events.”
She also thanked the laid off workers for their contributions, adding: “While difficult, these changes are necessary to streamline our business, unlock value and support our long-term growth. Together, we will continue driving toward our vision to be the leading partner in reimagining local health care and well-being for all.”
Walgreens reported a 3.3% sales increase in its second quarter, ended Feb. 28.
Operating income was $0.2 billion in Q2, compared with $1.2 billion in the year-ago quarter. According to the company, operating income in the quarter reflects a $306 million pre-tax charge for opioid-related claims and litigation, Summit Health acquisition costs and higher costs related to the Transformational Cost Management Program. Adjusted operating income was $1.2 billion, a decrease of 25.4% on a constant-currency basis, reflecting lower volumes of COVID-19 vaccinations and testing lapping the year-ago period's Omicron surge, planned payroll investments in U.S. retail pharmacy, and investments in U.S. health care, partly offset by improved retail contributions in the United States, as well as international growth.
Net earnings in Q2 were $703 million, compared with $883 million in the year-ago quarter. Adjusted net earnings were $1.0 billion, down 26.0% on a constant-currency basis.
EPS in the second quarter was 81 cents, compared to EPS of $1.02 in the year-ago quarter. Adjusted EPS decreased 27.2% to $1.16, a decrease of 25.8% on a constant- currency basis.
On May 11, Walgreens revealed that it sold shares of AmerisourceBergen Corp. common stock pursuant to variable prepaid forward transactions executed in reliance on Rule 144 of the Securities Act of 1933, as amended, for current proceeds of approximately $644 million. In addition, the company entered into a concurrent share repurchase by AmerisourceBergen for proceeds of approximately $50 million.
Deerfield, Ill.-based Walgreens, which operates nearly 9,000 retail locations across the United States, Puerto Rico and the U.S. Virgin Islands, is No. 5 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America.
