Walgreens; Financial Statement Analysts

2241 words 9 pages
Executive Summary
Walgreens offers an old-fashioned tonic for fiscal fitness: quality over quantity and homespun growth rather than growth through acquisitions. It works. While Walgreen has fewer stores than its closest rival CVS, it is #1 in the nation in sales. (Hoover's Inc, 2007)

Walgreens operates about 6,000 stores in 49 states and Puerto Rico, and has three mail order facilities. Prescription drugs account for 65% of sales; the rest comes from general merchandise, over-the-counter medications, cosmetics, and groceries. Walgreen usually builds rather than buys stores, so it can pick prime locations. For added convenience, more than two-thirds of its stores offer drive-through pharmacies, and almost all offer one-hour photo
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Caremark was combined with CVS's PBM and specialty pharmacy subsidiary PharmaCare Management Services, which offered managed-care drug programs to insurers, employers, and other healthcare plan providers, to form Caremark Pharmacy Services. (CVS; 2007)

Operations and Product/Services
With more prescription drug business going to managed-care health plans, convenience has trumped price in the race to attract new customers. (Co-pays are the same at any chain, and sick folks are often short on patience.) Walgreen has led the movement in creating a "convenience drugstore" chain with freestanding stores. The strategy has several advantages. Walgreen's freestanding stores are more visible than those in strip malls and offer shoppers ample parking and easy in-and-out access. About a fifth of its stores are open 24 hours a day and the abundance of drive-through pharmacies adds to the chain's convenience offerings. Because convenience also means being closer to customers, Walgreen builds new outlets at high-traffic locations (sometimes relocating new stores to better locations just blocks away). (Hoover's Inc, 2007)

In a bid to grow sales and differentiate itself from pharmacy rivals, such as CVS, Walgreen is adding low-priced basic apparel to the merchandise mix in all of its stores. The offering includes a variety of branded and private label garments, from bras to sweat suits, and will sell for less than $50. (Hoover's Inc,


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