Walgreens 2008 Annual Report Download - page 5

store experience and increase sales. As the architect Mies van
der Rohe said, “Less is more.”
Meanwhile, we have expanded our private brand product
offerings, which provide value to customers and higher profit
margins to our stores. We continue to offer competitively
priced consumables, whose sales have been very strong,
particularly for fast, easy, midweek fill-in needs in our
conveniently located retail stores.
We contained costs and are launching
new cost initiatives
During the year, we launched an aggressive – and successful –
cost control effort that delivered solid bottom line results.
We’re very proud of Walgreen people across our organization
for their perseverance in this initiative. Our store managers
have proven their ability to quickly adjust to evolving conditions
while maintaining a strong focus on customer service.
Over the course of fiscal 2008, we reduced the rate of growth of
expenses by six percentage points, even with the costs associated
with opening 561 net new drugstores this year, versus 468 last
year. This was an outstanding result. And we see plenty of
opportunity for even greater efficiencies.
We are currently conducting a company-wide initiative to align
our costs, culture and capabilities to our strategy and to the
realities of the current economic environment. As this report
went to press, we announced plans that target approximately
$1 billion in annual cost reductions by 2011 through more
efficient processes, strategic sourcing and plans to reduce
corporate overhead and work throughout our stores.
Our pharmacies are working to fill prescriptions more efficiently.
We’re in the early stages of rolling out a new initiative to trans-
form – and advance – the practice of community pharmacy.
Currently, we’ve focused on 300 Florida stores where we’re
moving tasks such as phone calls, data entry and insurance
verification from individual stores to more efficient central
processing facilities.
These centers will also fill approximately one-third of
prescriptions for delivery to the store when patients request
next-day pickup. We’re creating a hybrid approach that
blends the best of community pharmacy practices and central
fulfillment. These efforts will not only reduce our cost to fill
prescriptions, but will give our pharmacists more time to offer
expanded counseling services that improve patient compliance
and help people better manage chronic conditions such as
diabetes and hypertension. In many states, the government
already pays for these additional, valuable services.
We adjusted our organic store growth
Walgreens remains among the fastest growing retailers in the
country, even with our planned slowdown of organic growth
from the current 9 percent rate to 5 percent by 2011. Slower
growth offers two big positives: first, more time to develop
our management ranks and focus on improving the customer
experience; and second, greater flexibility to invest in
opportunities that will strengthen our core base and deliver
attractive returns to our shareholders.
While organic growth was once our primary growth strategy,
today it anchors a much broader strategy, which you will
find discussed throughout these pages.
We’re growing our health clinics and specialty
pharmacy business to complement our drugstores
We now operate more than 600 health and wellness clinics in
our stores and on employer worksites. Since acquiring two
worksite health center companies last spring, we’ve integrated
these services into our new Health & Wellness division,
which plans to expand to 800 sites by the end of fiscal 2009.
2008 Walgreens Annual Report Page 3
Sales
In billions of dollars
Earnings
In billions of dollars