As posted by: Wall Street JournalDrugstore giant Walgreen Co., which is slowing its breakneck growth in response to poor economic conditions, said it plans to eliminate about 1,000 corporate and field management jobs, or 9% of the total, by September.
The Deerfield, Ill.-based chain has never before cut management jobs as part of a strategic initiative, a spokesman said.
In October, Walgreen's launched an initiative to improve efficiency. The latest cuts fall under that plan. The initiative, expected to save $1 billion a year by the fiscal year beginning September 2010, includes reducing overhead and labor, saving money on spending for store fittings and computer equipment, and consolidating some pharmacy fulfillment work at central processing centers, the spokesman said.
Walgreen is the No. 2 drugstore chain, measured by number of stores, behind CVS Caremark Corp.
The company said it will offer voluntary severance packages to eligible employees initially, then move to a layoff program next month if necessary. About half the affected jobs are at headquarters and half in district management posts; no distribution center jobs or positions at its 6,600 stores will be affected, the spokesman said.
The company last month said it plans to slow the pace of new store openings to a rate of 4% to 4.5% in 2010 and between 2.5% to 3% in 2011.
Just last summer, Walgreen had foreseen slowing so-called organic growth to 5% in 2011. The new targeted growth rate will reduce capital expenditures by $1 billion through 2011.
For its fiscal 2009 first quarter ended Nov. 30, Walgreen said profit fell 10.4% to $408 million on sales of $14.9 billion.
Overall sales were up 6.6% in the period, while sales in stores open more than a year rose 1.7%. Prescription sales, which accounted for two-thirds of total sales in the quarter, continue to climb, against an industrywide decline, it said.
