Walgreens might have overstated theft issues, CFO says

Walgreens might have overstated theft issues, CFO says

A high Walgreens government on Thursday acknowledged the corporate might have overblown issues about thefts of their shops after shrinkage stabilized during the last 12 months. 

Throughout an earnings name, the corporate’s chief monetary officer, James Kehoe, mentioned shrinkage was about 3.5% of gross sales final 12 months however that quantity is now nearer to the “mid twos.” He additionally mentioned the corporate would think about shifting away from hiring non-public safety guards.

“Possibly we cried an excessive amount of final 12 months,” Kehoe mentioned. “We’re stabilized,” he added, saying the corporate is “fairly pleased with the place we’re.” 

Shrinkage is the distinction between an organization’s recorded stock on their steadiness sheet and its precise stock. It primarily accounts for objects that had been shoplifted but in addition contains stock that was broken, misplaced or stolen by staff.

During the last two years, Walgreens has been elevating the alarm about elevated theft. Consequently, it employed non-public safety guards and locked up merchandise so it might probably’t be accessed with no retailer affiliate. 

Anti-theft locked magnificence merchandise with customer support button at Walgreens pharmacy, Queens, New York.

Lindsey Nicholson | Common Photographs Group | Getty Photographs

Kehoe mentioned the corporate has spent a “honest quantity” to crack down on the thefts however acknowledged the non-public safety firms they’ve employed have been “largely ineffective.” These guards can do little or no however name legislation enforcement or maintain a suspect till police arrive. 

“We have put in incremental safety within the shops within the first quarter. Really, in all probability we put in an excessive amount of. We would step again somewhat bit from that,” mentioned Kehoe. The corporate is utilizing extra legislation enforcement versus non-public safety, he added.

A Walgreens spokesperson declined additional touch upon the matter.

Different retailers, equivalent to Walmart and Goal, have mentioned not too long ago shrinkage stays a rising concern. 

Walmart CEO Doug McMillon claimed he might need to shut shops and lift costs if the issue would not get beneath management. Goal claimed in its final earnings report that it not too long ago misplaced $400 million from shrinkage. 

Earlier Thursday, Walgreens launched its fiscal first-quarter earnings. It beat Wall Avenue’s estimates after an early flu season boosted demand for cough and chilly medication, but in addition reported $3.7 billion in losses after the pharmacy chain agreed to pay a hefty $5.2 billion settlement associated to opioid litigation.


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