Walgreens Boots Alliance outlines 3 growth initiatives at shareholders meeting
NEW YORK — Walgreens Boots Alliance this year moved its annual shareholder's meeting from the Windy City to the snow-ridden streets of Manhattan, approving three proposals made by the board, reviewing the company's recent events and looking ahead to the future.
There were three initiatives that emerged from the Walgreens Boots Alliance annual shareholder meeting held here this morning, all of which executives said would help deliver a banner year for Walgreens in 2016.
1. Rite Aid acquisition
Walgreens Boots Alliance is about to become a whole lot bigger. Today, their network serves almost 6 million consumers on a daily basis, filling almost 1 billion prescriptions annually in the process. That market penetration will grow considerably if the Rite Aid deal gets done — and judging from the comments made by WBA executives, they are confident the Rite Aid deal will get done in the second half of 2016.
“The acquisition will go a long way to help fill the gaps in our geographical coverage in the U.S. in one step,” Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO, said. “The addition of rite aid to our network offers the potential for significant cost savings and purchasing efficiencies in addition to opportunities in terms of important market penetration for our owned and exclusive portfolio," Pessina added. "We are currently going through the regulatory process ... for this transaction. So far, this process is proceeding as we had anticipated and we continue to expect the transaction will complete at some point in the second half of this calendar year.”
2. Valeant Pharmaceuticals partnership
The company's partnership with Valeant Pharmaceuticals, inked in December, is expected to drive increased value to not only the bottom line of Walgreens Boots Alliance but also drive value to healthcare payers. As part of that deal, Valeant will offer its branded dermatology and ophthalmology products at a reduced cost to the consumer.
“This partnership ... is a demonstration of how partnerships can create value while reducing costs for the system as a whole,” Pessina said. “Over time, such novel and collaborative initiatives have the potential to deliver significant benefit.”
3. Boots’ beauty proposition
Finally, Walgreens Boots Alliance is very much looking to take a page out of its Boots playbook by transforming Walgreens (and soon Rite Aid) into must-visit destination centers for WBA's owned beauty brands.
This summer, expect to see WBA's Boots brands like No7 and Soap & Glory in almost 2,000 stores as part of the company's iniative "Beauty 2000." "Really our mission here is to make Walgreens a beauty destination for the American consumer," explained Ken Murphy, EVP and president global brands WBA.
WBA us also working on a pilot merchandising package across 13 Houston stores called “Beauty Evolution.”
“We have transformed the entire beauty department of the store to really change the experience of the consumer within Walgreens, and that's under the Boots banner within the store,” Murphy said. “It's a learning experience [and] we've learned a huge amount. We've had a fantastic customer reaction to it, but it's also very expensive intervention.”
As for the meeting, which lasted 45 minutes, the three shareholder proposals outlined in the 2016 Proxy Statement were overwhelmingly supported by shareholders. Shareholders elected 11 directors to hold office until the next annual meeting of stockholders or until their successors are elected and qualified (98% of shareholders supported this measure); approved on an advisory basis the compensation of the named executive officers (97.4% of shareholders approved); and ratified Deloitte & Touche as the company’s independent registered public accounting firm for the fiscal year ending August 31, 2016 (98.9% of shareholders).
Top of mind among shareholders was the company's decision to keep tobacco products on store shelves — the first two questions to come from shareholders revolved around this issue. EVP WBA and Walgreens president Alex Gourlay reiterated Walgreens position that they are very much positioning their pharmacies as smoking cessation destinations but are not yet considering the removal of tobacco products from store shelves.