Walgreens 2009 Annual Report Download - page 3

2009 Walgreens Annual Report Page 1
During fiscal 2009, Walgreens achieved its 35th consecutive
year of record sales despite challenging market conditions.
We made significant progress in advancing one of the
most important strategic and operational transformations
in our 108-year history. At the same time, we adjusted our
business model to navigate through the worst economic
downturn in decades. Costs associated with our transfor-
mation resulted in $257 million in pre-tax restructuring
charges ($163 million after-tax); excluding those charges,
2009 would have also marked our 35th consecutive
year of record earnings. We expanded our position as
America’smost convenient provider of consumer goods
and services, and pharmacy, health and wellness services.
And, we remain confident our profitable growth will
continue under what may become the most significant
reform to our health care system since the introduction
of Medicare.
Our leadership has worked diligently to identify new
and better ways to connect with our customers and the
communities we serve, and drive revenue growth, cost
reduction and improved profitability. Weachieved a
number of important milestones in the year, and this fall
opened our 7,000th drugstore, a long-standing objective.
Achanging economy’simpact on the consumer
The recession has clearly had a major and lasting effect
on consumer behavior.Shoppers remain concerned about
U.S. unemployment levels that areexpected to exceed
10 percent. They are avoiding the use of credit, searching
for the best value and buying on the basis of needs instead
of wants. Our response has been to place less emphasis
on discretionaryitems and to lower our prices on several
hundred everyday products through our “Save more green
at Walgreens” campaign, which promotes weekly sales,
private brand products and “Affordable Essentials.” These
changes are part of a broader customer-centric retail
initiative we are introducing chainwide to improve the
customer experience, better match storemerchandise to
evolving consumer preferences and enhance the relevancy
of Walgreens brand in meeting the needs of individuals
and families in communities across the country.
Health care reform
No doubt, America’s health care system is in need of
reform. U.S. families need better access, affordability and
quality,and reform will almost certainly expand health care
access to millions of Americans. With nearly 170 million
Americans presently covered under some type of employer-
sponsored health insurance plan, corporate America will
continue to play a vitally important role in the health care
system. The vast majority of employers want to continue
Letter to Shareholders
Gregory D. Wasson (left)
President and
Chief Executive Officer
Alan G. McNally
Chairman of the Board