Walgreens executive says ‘maybe we cried too much last year’ about theft

A prime Walgreens executive on Thursday acknowledged the corporate might have overblown issues about thefts of their shops after shrinkage stabilized over the last 12 months. 

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

“Maybe we cried too much last year,” Kehoe mentioned. “We’re stabilized,” he added, saying the corporate is “quite happy with where we are.” 

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

Over the last two years, Walgreens has been elevating the alarm about elevated theft. As a end result, it employed personal safety guards and locked up merchandise so it may well’t be accessed with no retailer affiliate. 

Kehoe mentioned the corporate has spent a “fair amount” to crack down on the thefts however acknowledged the personal safety corporations 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’ve put in incremental security in the stores in the first quarter. Actually, probably we put in too much. We might step back a little bit from that,” mentioned Kehoe. The firm is utilizing extra legislation enforcement versus personal safety, he added.

A Walgreens spokesperson declined additional touch upon the matter.

Other retailers, similar to Walmart and Target, have mentioned not too long ago shrinkage stays a rising concern. 

Walmart CEO Doug McMillon claimed he may need to close stores and raise prices if the issue does not get below management. Target claimed in its last earnings report that it recently lost $400 million from shrinkage. 

Earlier Thursday, Walgreens released its fiscal first-quarter earnings. It beat Wall Street’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.