Walgreens 2006 Annual Report Download - page 6

• We introduced a new Walgreens logo to better capitalize
on customer recognition of our signature “W.”
• We’re on schedule to open our Anderson, South Carolina,
distribution center early next calendar year. Our plan is
to hire people with disabilities for up to
30 percent of the workforce there and in
our Connecticut distribution center,
opening in fiscal year 2009.
• Digital photo services have been expanded,
and we introduced printer cartridge refill
service in 1,500 stores.
• We added a record number of pharmacists
and management trainees.
• We’ve established alliances with three
organizations: AARP; Joslin Diabetes Center,
an affiliate of Harvard Medical School;
and the National Urban League.
What’s been the impact of the new
Medicare Part D prescription program?
Bernauer: It’s boosted prescription volume, but tightened
gross profit margins due to lower reimbursement rates. Our
pharmacists’ work in educating seniors has brought tens
of thousands of new patients to Walgreens. Since March 1,
our share of Medicare patients has grown twice as fast as
our total share. Most important, despite the confusion it
caused, Part D is helping millions of people afford lifesaving
and life-improving drug therapy.
Can you comment on WAG stock movement?
Rein: Sure, I can comment, but it’s one metric at Walgreens over
which we have no direct control. To us, the very worst way to
run a company is to consider the stock price impact of every
move. Not every decision pays off this year
or even five years out, but that doesn’t
mean it’s the wrong decision.
Walgreens is not an in-today/out-tomorrow
investment. We’re favored by people and
institutions looking for consistent, long-term
growth, and we have a history of meeting that
expectation. But we’re also the most richly
valued stock in our industry, and the only way
to keep moving that needle up is to prove our
worth to the American consumer day after
day after day. We plan $1.7 billion in capital
expenditures this fiscal year to do just that.
What’s your reaction to the hit
WAG’s taken from Wal-Mart’s new generic plan?
Rein: We’re letting the markets sift out reality. Wal-Mart’s
limited promotion is in response to the increasing number
of seniors choosing Walgreens for their pharmacy needs.
It provides no significant savings for the vast majority who
prefer our convenient locations, 24-hour service and multiple
pharmacy advantages. What distresses us most is the portrayal
of prescriptions as a commodity item, with no thought to
professional service, safety and trust. It equates prescriptions to
Barbie dolls and CDs, and that’s not positive for healthcare.
Page 4 2006 Walgreens Annual Report
Prescription Growth by Channel
1998 – 2005
In percent
Population Within Two Miles
of a Walgreens
In millions
Letter to Shareholders
Deborah Stewart, a pharmacy manager in
Atlanta, is one of more than 21,000 Walgreen
pharmacists serving patients.