As part of its transformation to become a “consumer-centric healthcare” organization, Walgreens Boots Alliance announced that it is consolidating its operations into three business groups. This move may be considered the most recent item in the “COVID-19 Changed Everything” file.
This is because sales at the Chicago-based retail chain’s largest division, the U.S. Retail Pharmacy segment, fell 7% in its most recent fiscal fourth quarter, which ended on August 31, while they increased 34% at the vastly smaller U.S. Healthcare division, which has 13,000 stores across the United States, Europe, and Latin America.
Rosalind Brewer, CEO of Walgreens, remarked on the company’s webcast that “our script count is the one soft place for the year to point out,” noting that domestic digital sales were up 34% for the 2022 fiscal year.
Along with a decline in COVID-19 vaccinations and related care, prescriptions are down, and Walgreens, like all of its main competitors, is shifting to provide its clients with a variety of treatments and services that go well beyond selling medication.
Brewer stated on the webinar that “we are quickly growing U.S. healthcare and are already boosting long-term sales forecasts with a clear path to reach profitability starting in fiscal year ’24.” “Although it’s still early, our plan is bearing fruit, and each of our four priorities—simplifying—is doing well.
Simple and Powerful
The truth remains that Walgreens shops accounted for 82% of its sales, or $26 billion of its reported top line of $32 billion, compared to just $622 million provided by its newly elevated U.S. Healthcare sector. While simplicity and strength are admirable goals for any firm.
Nevertheless, pointing to the historical macro issues that are impacting its consumers, Walgreens’ executive team informed investors that this is the ideal time to grow and expand the firm.
Brewer said that consumers today prioritize health and well-being more highly than they did two years ago because of the four-decade-high inflation rate and their expressed anxiety about the future.
Domestic Care
As evidenced by the accelerated acquisition plan to full ownership of CareCentrix announced earlier this week, Walgreens is promoting its enhanced offering in the quickly expanding in-home treatment business as a centerpiece of its consumer-centric focus in addition to continuing to expand the increased in-store activities of the COVID-era. Brewer informed investors that CareCentrix’s addition to Walgreens’ Village MD and Shield businesses resulted in top-line growth of 75% for the company’s U.S. Healthcare sector.
Brewer stated that “we are taking significant steps, making steady progress, and constructing our next growth engine.”
