Competitive Watch: Walgreen Mulls New Strategy

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Competitive Watch: Walgreen Mulls New Strategy

CHICAGO -- Walgreen Co. is working on changes to its drugstore format and hired consultants Booz Allen Hamilton, the company told Reuters.

Booz Allen consultants have been working at the company's Deerfield, Ill. headquarters, a Walgreen spokesman said, though he declined to discuss details, saying the company would unveil plans to improve store operations during an Oct. 30 analyst day, the report stated.

Additionally, the company said Tuesday it would buy McKesson Corp.'s specialty pharmacy business for an undisclosed sum—a move that helps expand its health services into areas such as oncology, multiple sclerosis and reproductive health, according to Reuters.

The company may also introduce a loyalty card and spruce up stores. It may also do more to promote its lower-priced generic plan to help boost traffic and sales as competitor CVS Caremark ratchets up competition, analysts said in the Reuters report.

CVS purchased Caremark in 2007, and just this month won out over Walgreen in its acquisition of Longs Drug Stores Corp.

Walgreen Chief Executive Jeffrey Rein abruptly left the company Oct. 10, two days after it withdrew an unsolicited bid repeatedly rebuffed by Longs, the report stated.

"What we'd like to hear is really just a focus on better blocking and tackling," said Stephanie Hoff, Edward Jones analyst who has a "buy" rating on Walgreen in the Reuters report. "If they could address those issues, and address them compellingly, I think there's a lot of room for the stock to move higher."

After posting its first quarterly profit decline in nearly 10 years, Walgreen is planning its first major analyst meeting for the end of the month to try to address investor concerns more directly, according to the report.

"We will be talking about our store plans and changes we're looking at making," the Walgreen spokesman said of the meeting.

Among other changes, Walgreen added a chief marketing officer, Kim Feil, in late September, who is slated to speak at the upcoming meeting. Alan McNally was named chairman and acting CEO and the company's board is looking internally and externally for a permanent CEO.