- Walgreens admitted that their concerns about organized retail theft were exaggerated: “Maybe we cried too much last year.”
- The pharmacy giant claimed that “gangs” were causing store closures by stealing large quantities of beauty products, despite those claims not being supported by the facts.
- Other retailers, including Home Depot, Target, and Walmart, have also pointed to retail theft as a threat to their businesses, even while posting record profits during the pandemic.
In a recent earnings call, Walgreens’ chief financial officer, James Kehoe, admitted that the company may have overreacted to what it had previously referred to as “organized retail theft” by “gangs” that forced store closures.
“Maybe we cried too much last year,” Walgreens chief financial officer James Kehoe said on January 5th, according to CNBC. “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.”
Kehoe stated that shrinkage, or the difference between the company’s recorded inventory and actual stock on shelves, had amounted to 3.5% of total sales in the past year, but had now stabilized at a “mid two and a half range.”
This figure includes not only shoplifted items but also damaged and lost items.
Walgreens claimed that theft was a major issue and started implementing private security measures, locking down certain items on shelves.
However, Kehoe stated that private security had been largely ineffective and the company primarily relies on local law enforcement to handle theft incidents now.
This admission comes after several retailers, including Walmart and Target, have also pointed to retail theft as a threat to their businesses and threatened to close locations, even as they posted record profits during the Covid-19 pandemic.
It is worth noting that Walgreens’ reported sales for its fiscal first quarter were $33.4bn, despite reporting losses of $3.7bn largely due to a $5.2bn settlement related to opioid litigation.