The Importance of Walgreens’ Transition from Pharmacy to Health Services
Walgreens has been undergoing a strategic shift from its traditional focus on pharmacy and retail towards a greater emphasis on health care services. However, this transition has yielded mixed results, with the company’s shares declining to a near 14-year low. In light of this, Walgreens recently announced that its profit for the year would likely fall at or below the lower end of its previous forecasts.
Neil Saunders, the managing director of GlobalData, expressed skepticism about this strategic move, stating, “While the wisdom of this move is debatable, health care is not Ms. Brewer’s forte.” Ms. Brewer, the now-departed CEO of Walgreens, previously held executive positions at Starbucks and Walmart subsidiary Sam’s Club.
During her tenure at Walgreens, Ms. Brewer oversaw the introduction of doctors’ offices within their stores and managed the complex rollout of the Covid-19 vaccine, as well as the enforcement of pandemic safety measures.
In a statement, Ms. Brewer expressed her pride in the company’s accomplishments and its trajectory towards becoming a leading consumer-centric health care company.
Quotable: The Challenging Timing of Executive Departures
Ms. Brewer’s departure follows closely after the resignation of the company’s chief financial officer, James Kehoe, who assumed a finance chief position at technology firm FIS. Industry experts believe that as Walgreens intensifies its focus on the health care industry, it will face numerous obstacles. Deutsche Bank analysts highlighted challenges such as managing pharmacy reimbursements, transforming the business model to prioritize primary care, and addressing opioid liability issues.
Regarding the timing of these departures, the analysts wrote, “The departure of the two key executives comes at possibly the worst time. We cannot recall a time in our coverage experience where we have seen both the C.E.O. and the C.F.O. depart a large-cap company in such a short span where there were not other issues at the company.”
What’s Next: The Search for a Permanent Successor
Walgreens confirmed that they are currently conducting a search for a permanent CEO. In the interim, Stefano Pessina, the executive chairman, believes that Ms. Graham is the ideal candidate to serve as interim CEO. Ms. Graham brings a wealth of experience, having previously served as CEO of Amylin Pharmaceuticals and chairman of Guidant, with a career that began at Eli Lilly.
It is worth noting that it is uncommon for a woman to succeed another female CEO. Gender diversity within the top ranks of retail companies has declined recently. Out of the 86 retail companies in the Fortune 1000, only 13 had a female CEO as of July, slightly less than the previous year, according to executive recruiting firm Heidrick & Struggles. Among the Fortune 500, there are currently 50 female CEOs, as reported by Catalyst, an organization that collaborates with numerous companies to advance women’s careers.
With Ms. Brewer’s departure, Thasunda Duckett, the CEO of TIAA, remains as the sole Black female CEO among Fortune 500 companies.
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