Why It Matters: A messy pivot from pharmacy to health services.
Walgreens has been shifting away from pharmacy and retail to focus more on health care services, with mixed results. The company’s shares sank further on Friday, dropping to near a 14-year low. The company said its profit this year would be “at or near the low end” of its forecasts.
“The group, which previously grew through various pharmacy acquisitions, is now looking to consolidate and focus its efforts on the U.S. health care sector,” Neil Saunders, managing director of GlobalData, said in an email. “While the wisdom of this move is debatable, health care is not Ms. Brewer’s forte.”
Before joining Walgreens, Ms. Brewer was the chief operating officer of Starbucks and previously served as chief executive of Sam’s Club, a division of Walmart.
During Ms. Brewer’s tenure, in addition to opening more doctors’ offices inside its stores, she oversaw the complicated rollout of the Covid-19 vaccine at pharmacies and enforcement of pandemic safety standards within stores.
In a statement, Ms. Brewer said she was proud of what she had accomplished and said the company was “on track to be a leading consumer-centric health care company.”
Quotable: “The worst time” for an executive departure.
The announcement of Ms. Brewer’s exit came a little over a month after the company’s chief financial officer, James Kehoe, left to become a finance chief at the technology firm FIS.
As Walgreens leans more into the health care business, it faces several hurdles, industry experts said. In a note to clients, Deutsche Bank’s analysts said the challenges included managing tricky pharmacy reimbursements, transforming its business model to focus on primary care and dealing with opioid liability issues.
“The departure of the two key executives comes at possibly the worst time,” the Deutsche Bank analysts wrote. “We cannot recall a time in our coverage experience where we have seen both the C.E.O. and the C.F.O. depart a large-cap company in such a short span where there were not other issues at the company.”
What’s Next: The search for a permanent successor.
Walgreens said a search for a permanent leader was underway.
Stefano Pessina, the company’s executive chairman, said in a statement that Ms. Graham was the “ideal person to serve as interim C.E.O.” Ms. Graham was previously chief executive of Amylin Pharmaceuticals, chairman of Guidant Corporation and started her career at Eli Lilly.
It is rare for a woman to replace another female chief executive. This year, gender diversity has fallen within the top ranks of retail companies. Of the 86 retail companies in the Fortune 1000, 13 had a woman as chief executive as of July 2023, down slightly from the year before, according to the executive recruiting firm Heidrick & Struggles.