Walgreens

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Walgreens Co – Progress Report 1

Company Background:

A)What is the ticker symbol of your company? Identify the stock exchange(s) where your company stock trades.

The corporate name of the Walgreens drugstore chain is Walgreens Co, as identified on Form 10-5 (SEC Filing). The company is traded in the NYSE under the ticker symbol ‘WAG’.

B) Read the auditor’s report included in the annual report of the company and explain its purpose. Identify the name of the auditing firm.

Walgreen’s was audited by Deloitte & Touche LLP, based in Chicago, Illinois. The annual report and subsequent audit data was reported for the fiscal year ended 8/31/11.1 The ‘Report of Independent Registered Public Accounting Firm’ certifies that the named accounting company has performed a comprehensive overview of the audited company’s financial records. It further certifies the accounting company’s opinion on whether the financial information provided by the audited company is correct in regard to the application of generally accepted accounting principles. The auditor’s report also provides the accounting company’s opinion on whether the financial information supplied is a fair representation of the audited company’s financial position. The auditor’s report also contains information and a disclaimer regarding the internal controls of the audited company. The financial information provided is subject to the effectiveness and accuracy of the internal controls to computer accurate data.

C)Briefly explain the major operations of your company. What products does it sell/or services does it render? Identify major competitors of the company.

Walgreens is the nation’s leading retail pharmacy and drug store chain. Starting with a single location in Dixon, IL in 1901, Walgreens has grown to 7,500+ (as of 2010) locations throughout the United States. Walgreens employs approximately 244,000 people nationwide and services 5.9 million customers daily. They are currently ranked as the national leader within the drugstore industry in both sales and profit. 1

The core business of Walgreens is the sale of prescription drugs and over the counter drugs. However, the sale of various household goods and grocery items is also a major contributor to the company’s income. Currently, Walgreens retail stores carry an estimated 18,000 different items for sale to the general public.

In addition to the retail operations, the company also operates worksite health centers, home care facilities, and specialty mail service pharmacies. A wholly owned subsidiary, Take Care Health Systems, is the largest and most comprehensive provider of worksheet health and wellness centers and convenience care clinics, having more than 700 locations throughout the country.

Gross sales during recent years have steadily increased. Sales in 2008 were $59 billion, growing to $63 billion in 2009 and $67 billion in 2010 (based on fiscal year end 8/31 figures). Third quarter 2011 (Mar-May 2011) increased 7% from the second quarter to a total of $18.3 billion. During the same period, gross profit (as a percentage of sales) improved 50 basis points to 28.1% due to an increase in higher margin for generic drug sales.

Walgreen’s major competitor within the retail drugstore industry is CVS Caremark. Although this is the primary competitor, smaller local pharmacies and larger grocery stores (ie. Wal-Mart, Jewel-Osco, etc) are also key competitors. Various convenience stores and gas station chains are key competitors in the retail sale of over the counter drugs and household goods.

Developments Relating to the Company:

Identify two recent evens of significance (e.g., layoffs, reorganizations) that have affected the company.

Walgreens has undergone significant changes in 2011, resulting from the purchase and sale of different entities and subsidiaries. The first notable change is the sale of Walgreens Health Initiatives (herein referred to as...
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