Employees at Walgreens will not be getting full bonuses in 2020, according to James Kehoe, the executive vice president and global chief financial officer, the Chicago Tribune reports.
Walgreens didn’t pay bonuses in 2019 as well and cut the bonus amounts received by store managers and others in 2018 by a significant amount.
Even before the COVID-19 pandemic hit, Walgreens was responding to changing consumer habits as well as pressures related to medications reimbursements.
Walgreens leaders said a year ago that by 2022, they planned to cut $1.8 billion in costs, and that cost-cutting goal was recently enhanced to $2 billion.
More than 200 locations have been shuttered after Walgreens announced plans in 2019 to close more stores. The company plans to close about 250 US stores in total.
Walgreens also has been forming partnerships with companies including Kroger and FedEx to give customers extra reasons to visit its stores.
Starting on Friday, Walgreens will offer customers who buy items online the ability to pick up their purchases in-store, curbside or at drive-thru windows within 30 minutes of placing an order, said Alex Gourlay, co-chief operating officer.
The company has also relaunched its prescription cost savings program and is reportedly working to enhance its customer loyalty program.
COVID-19 took a bite out of Walgreens Boots Alliance quarterly numbers but this time left behind better-than-expected earnings.
The drugstore chain said Thursday that it made $373 million in the final quarter of fiscal 2020 after losing $1.7 billion the previous quarter when millions of shoppers stayed home to avoid the rapidly spreading pandemic.
COVID-19 still hurt. The company estimated that the pandemic’s impact shaved about $520 million from its operating income in the most recent quarter.
But Walgreens also grew sales and prescriptions in the US and saw some improvement in the United Kingdom. Walgreens Boots Alliance Inc. runs more than 9,000 stores in the US and several thousand locations internationally.
Company shares climbed higher than the broader market in morning trading Thursday.
Drugstore chains and other retailers were pummeled earlier this year by lockdowns that kept customers away from their stores. But as those restrictions eased, companies have since started reporting improving numbers.
Walgreens leaders told analysts Thursday that customer visits to their stores were still down, but shoppers were continuing to buy more per visit.
Sales from established US stores climbed 3.6% compared to last year’s quarter. That’s an important metric because it excludes stores that recently closed or opened.
Those sales dropped 29% for the company’s Boots stores in the United Kingdom, but the company said customer visits improved steadily compared to the third quarter.
Overall, the company booked adjusted earnings of $1.02 per share in the three-month window that ended Aug. 31. Revenue climbed 2% to $34.75 billion.
Analysts expected, on average, earnings of 96 cents per share in the fiscal fourth quarter on $34.37 billion in revenue, according to financial data provider FactSet.
Company officials said they expect the pandemic’s impact on their business to subside in the second half of the new fiscal year as people start receiving vaccines — which have yet to be approved by regulators — and more customers return to their stores.
“We are confident we will come out of this in better shape,” Executive Vice Chairman and CEO Stefano Pessina said.
Walgreens forecasts low, single-digit adjusted earnings per share growth in its new fiscal year.
The company finished 2020 with adjusted EPS of $4.74. Analysts forecast, on average, earnings of $4.80 per share for fiscal 2021, which would represent growth of about 1%.
Walgreens announced in July that Pessina will step down as CEO once the company finds his replacement. He said Thursday they had no updates on that search.
Shares of the Deerfield, Illinois-based company climbed nearly 3% to $36.90 Thursday morning while the Dow Jones Industrial Average fell slightly. Walgreens is a Dow component.