Walgreens (NYSE:WAG)(NASDAQ:WAG) today announced it is offering early
retirement and severance programs to employees in corporate and field
management positions as part of its Rewiring for Growth initiative.
Approximately 1,000 positions (about 9 percent of those currently
employed in corporate and field management) will be eliminated by the
combination of voluntary and involuntary programs in fiscal 2009. These
programs will not impact store personnel.
Rewiring for Growth is one of the company’s key strategic initiatives
designed to leverage the value of its core businesses - to earn “more
from the core” for its shareholders. The project, first announced at
Walgreens Analyst Day meeting in October, will align the company’s cost,
culture and capabilities to enhance customer service and satisfaction
levels for shoppers, patients and payors.
To reduce overhead, including the number of people employed in corporate
and support roles, Walgreens is enabling eligible employees to
voluntarily resign or retire from the company with both severance pay
and benefits coverage based on years of service and retirement
eligibility. This program is being offered in advance of a supplemental
involuntary separation program that will begin in February. The company
intends to reduce to the extent possible the number of involuntary
separations by offering a more favorable voluntary program first. Under
the voluntary program, eligible employees can receive more weeks of
severance pay and continuation of retiree medical benefits if they meet
certain age and service requirements.
“Our Rewiring effort is finding ways for Walgreens to be more effective
and efficient so that our growth strategy can move forward,” said
President Gregory D. Wasson. “We are committed to reducing our corporate
and support staff level fairly and with respect for all of our
employees, which is why we’re first offering a voluntary separation
program.
“We’ve succeeded for more than a century by changing as the economy, our
industry and the marketplace change and have always adjusted to keep our
company strong and growing.”
In its entirety, Rewiring for Growth targets $1 billion in annual
savings by fiscal 2011. The company will achieve savings through:
-
strategic sourcing on indirect spend (all goods not for resale),
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reduction in overhead and labor,
-
and the POWER project, which is designed to enhance patient-pharmacist
interaction while reducing costs.
Walgreens expects to incur costs of $300-$400 million over fiscal years
2009 and 2010 as it implements Rewiring for Growth. Fifty percent of the
project’s benefits are expected to accrue beginning in fiscal 2010, with
the full $1 billion in targeted annual savings beginning in fiscal 2011.
Walgreens (www.walgreens.com)
is the nation's largest drugstore chain with fiscal 2008 sales of $59
billion. The company operates 6,636 drugstores in 49 states, the
District of Columbia and Puerto Rico. Walgreens provides the most
convenient access to consumer goods and services and cost-effective
pharmacy, health and wellness services in America through its retail
drugstores, Walgreens Health Services division and Walgreens Health and
Wellness division. Walgreens Health Services assists pharmacy patients
and prescription drug and medical plans through Walgreens Health
Initiatives Inc. (a pharmacy benefit manager), Walgreens Mail Service
Inc., Walgreens Home Care Inc., Walgreens Specialty Pharmacy LLC and
SeniorMed LLC (a pharmacy provider to long-term care facilities).
Walgreens Health and Wellness division includes Take Care Health Systems
(www.takecarehealthsystem.com),
the largest and most comprehensive provider of worksite health and
wellness centers and in-store convenient care clinics, with nearly 700
locations throughout the country.
This news release may contain forward-looking statements that involve
risks and uncertainties. The following factors could cause results to
differ materially from management expectations as projected in such
forward-looking statements: seasonal variations, competition, risks of
new business areas, the availability and cost of real estate and
construction, prescription drug reimbursement rates, and changes in
federal or state legislation or regulations. Investors are referred to
the "Cautionary Note Regarding Forward-Looking Statements" in the
Company’s most recent Form 10-K, which Note is incorporated into this
news release by reference. The forward-looking statements in this press
release are made only as of the date hereof, and unless otherwise
required by applicable securities laws, the Company disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
