Walgreens 2007 Annual Report Download - page 6

Page 4 2007 Walgreens Annual Report
We just opened our 6,000th store and are on track to exceed
our goal of operating 7,000 stores in 2010. Beyond that, we see
room in the United States for organic growth that would take
us to 13,000 sites. And, while our primary growth focus remains
organic expansion, we’re very open to acquisitions when the
right opportunity arises.
We’re also expanding our reach. The first of several planned
Walgreens in Hawaii has just opened, and we’re aggressively
opening stores in other locations where we’re underrepresented,
particularly the densely populated Northeast region and
Southern California. We recently signed a lease for a new store
in Manhattan’s Times Square that should open next summer.
We anticipate that it will soon be the highest profile store in
our chain. Interestingly, this is a “déjà vu” corner. There was
a Walgreens store at the same location – One Times Square –
from 1933 to 1961.
What about the front-end of the stores? How are
non-pharmacy sales doing?
Greg Wasson: They’re excellent. Front-end sales in comparable
stores (open more than a year) rose 5.8 percent for fiscal 2007,
topping 5 percent for the fourth consecutive year. For the 52
weeks ending August 11, we increased our market share in
59 of our top 60 product categories compared to food, drug
and mass merchandise competitors.
In this report, you’ll see many examples of how we’re leveraging
our existing stores to drive increased sales and customer traffic –
offerings such as DVD rentals, Café W beverage bars, new digital
photo services and cost-effective printer cartridge refills.
We’re also expanding private and exclusive brand products,
particularly in the skincare area.
Who do you believe is your strongest competition?
Jeff Rein: Our strong competitors are improving and many
weaker ones have fallen. I would rate CVS, Rite-Aid, Target,
Wal-Mart and – on the Internet side – Drugstore.com, as very
good operators. Regionally, we particularly admire Bartell Drugs
in the Northwest, Kerr Drug in the Southeast and Longs Drugs
in the West. They all watch us like hawks … as we do them.
You’ve added convenient care clinics in some stores.
Where do you see this going?
Greg Wasson: Our acquisition of Take Care Health Systems is
a cornerstone in our expansion of healthcare services. We’re
very encouraged by early patient acceptance of the Take Care
Health Clinics. We’ll have approximately 120 clinics by
December 31, and hope to have 400 by the end of calendar
2008. Take Care Health Systems, a wholly owned subsidiary of
Walgreens, manages the clinics. They’ll open nine new markets
this fall, including Cincinnati, Cleveland, Houston, Las Vegas,
Miami, Nashville, Orlando, Tampa and Tucson.
The clinics open patient access to healthcare at a time when
the nation’s system is challenged by high costs and fewer
physicians choosing to specialize in primary care. They treat
minor ailments at a cost much lower than in emergency rooms
and doctors’ offices. And by recognizing early symptoms of
serious problems, the health professionals who staff the
clinics can refer patients to doctors or hospitals for higher
levels of care.
Walgreens Store Growth
Drugstores as of August 31
Customers Within Two Miles
of a Walgreens
In millions
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