Walgreens 2005 Annual Report Download - page 7

popular items on the shelves, we need to show
women we’re paying more attention to what they
need and want.
Second is to hire a significant number of people
with disabilities – including many with severe
developmental challenges – in our South Carolina
distribution center, scheduled to open in 2007.
My hat is off to our distribution and logistics
management. We have charged them to achieve a
20 percent productivity improvement in this center,
which is a new prototype design for Walgreens. They
have charged themselves with designing workflow and
technology that will allow a person with a significant
disability to hold a job, something many in that
population have never thought possible. We’re told
no company has attempted such a project on this
scale. We are dedicated to making it work.
Our stock closed up 27 percent for the year, but bounced
around this fall. What’s your prediction for WAG?
Bernauer: We don’t get into predictions and we don’t
concentrate on short-term ups and downs. We all
loved seeing the share price close to $50 in the
summer, but our fourth quarter was hit by outside
influences – the hurricanes – and inside challenges –
a slightly lower sales trend late in the summer and
higher inventory levels. Consequently, the quarter
missed the expectations of all but the most conservative
analysts, and our stock took a hit as well. When your
value relative to earnings is as high as Walgreens –
above CVS, Wal-Mart, Target and Costco – any hiccup
makes Wall Street nervous.
What’s important to Jeff and me – and why most
investors respect WAG – is our potential for long-term
return on investment. That’s due to our continuing
aggressive growth, the underlying strength of operations
and our strong financial condition. As one writer said
recently, “Our population isn’t getting any younger,
healthier or thinner, and the outlook for drug demand
is pretty good.” Personally, we think “pretty good” is
an understatement. With more stores, more generic
drugs and more senior citizen Medicare patients
coming our way, we are very excited about this
company’s future prospects.
Thank you for reading our report…and for your
belief in the people of Walgreens. Please keep our
many hurricane-affected folks in your thoughts. They
deserve the thanks of every Walgreen shareholder
for the amazing comeback we made to serve needy
customers under the most difficult of circumstances.
We are so proud of them.
David W. Bernauer
Chairman and Chief Executive Officer
Jeffrey A. Rein
President and Chief Operating Officer
Walgreens Store Growth
Drugstores as of August 31
Customers Within Two Miles
of a Walgreens
In millions
2005 Annual Report 5