• by Sarah Mahoney  @mahoney_sarah, October 12, 2023

Six weeks after the high-profile departure of chief executive Rosalind Brewer, Walgreens Boots Alliance has named Tim Wentworth as CEO. The new boss takes over just as the company announced disappointing profits, declining retail results and a widespread pharmacist walkout.

Wentworth comes to the role from CEO of Evernorth, Cigna’s health services organization, and he has deep experience in healthcare. Those bona fides make a sharp contrast to the consumer goods pedigree of Brewer, who joined the company in 2021 as chief operating officer at Starbucks, as well as critical roles at Walmart and Sam’s Club.

Fourth quarter sales at the Deerfield, Illinois-based company rose 8.3%, on a constant currency basis, to $35.4 billion. Revenues for the full fiscal year added 5.6% to reach $139.1 billion. While those topline results came in slightly better than expected, profits missed the mark: Net loss in the fourth quarter totaled $180 million compared to a net loss of $415 million in the year-ago quarter. For the year, net loss was $3.1 billion, compared with net earnings of $4.3 billion in the year-ago period, reflecting opioid-related claims and litigation and spending on ongoing transformation efforts.

And while pharmacy results improved, rising 6.4%, retail sales dipped 4.3%. Walgreens attributed that weakness to scaled-back consumer spending, lower demand for COVID test kits and weaker sales of respiratory seasonal items.

“Our performance this year has not reflected WBA’s strong assets, brand legacy, or our commitment to our customers and patients,” said Ginger Graham, interim chief executive officer, in the announcement. “In just six weeks, we have taken a number of steps to align our cost structure with our business performance.”

Those include planned cost reductions of $1 billion, which it expects to begin to pay off by the second quarter.

“Walgreens continues to see headwinds in its overall business, including a normalization of respiratory events, lower COVID-19-related contributions and a challenging macroeconomic environment,” writes Keonhee Kim, an analyst who follows the company for Morningstar.

And while Walgreens’ U.S. healthcare division reported $2 billion in sales and showed continued improvement in profitability, “bottom-line growth has been slower than we expected.”

It doesn’t help the brand’s image that thousands of Walgreens pharmacy workers walked off the job this week, impacting operations at hundreds of stores. They cited unsafe working conditions, claiming chronic understaffing puts employees and the public at risk. These workers, who are not unionized, say consumers are increasingly angry and impatient as pharmacists and techs work to juggle the demands of massive prescription backlogs and vaccine administration.

“We are engaged and listening to the concerns raised by some of our team members,” a Walgreens spokesperson said in a statement to the Washington Post. “We are committed to ensuring that our entire pharmacy team has the support and resources necessary to continue to provide the best care to our patients while taking care of their well-being.”

Kim adds that while he expects the pharmacist walkout to have “minimal effect from a corporate standpoint,” it does create a significant -- and highly visible -- challenge for Wentworth right out of the gate.