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Walgreen outlined at an analyst conference in Chicago yesterday a series of initiatives designed to save the company about $1 billion in annual costs by fiscal 2011. One of its main initiatives will be to slow store growth in order to develop its management ranks and free up capital to invest in its core business.
Other initiatives revealed Thursday include enhancing the customer experience for shoppers and patients; further extending its presence in pharmacy, health and wellness services; broadening and deepening its relationships with employers and managed care organizations; and major cost reduction and productivity gain. The company said it expects that these initiatives will result in increased revenue growth and return the company to double-digit EPS growth.
“In these difficult economic times, American families are setting new priorities and making new choices,” said company chairman and acting ceo Alan McNally. “One choice is to shop close to home to save gas and valuable time. Walgreens has a terrific opportunity to be their neighborhood store – their retailer destination of choice in their community – for more of their necessities of life.”
The Deerfield, Ill.-based drug chain plans to increase the number of its in-store clinics to more than 800 by the end of fiscal 2009 from more than 600 now. Walgreen plans to take one-time charges of about $300 million to $400 million over fiscal 2009 and 2010 for the initiatives. The company said it will reduce capital expenditures to about $1.8 billion in fiscal 2009, compared with $2.2 billion in fiscal 2008.