Dive Brief:
- Walgreens-Boots Alliance CFO James Kehoe resigned from his position in order to pursue a new opportunity in the technology sector, the company said in a filing with the Securities and Exchange Commission. Kehoe, whose resignation from the role was effective Thursday, will stay on with the company in an advisory role until his departure in mid-August, according to the filing.
- Controller and Chief Accounting Officer Manmohan Mahajan will serve as interim CFO as the company searches for a permanent finance chief “who not only brings deep financial acumen to WBA, but also healthcare experience,” the company said Thursday in a press release.
- The company’s VP and Assistant Global Controller, Todd Heckman, will serve as interim global controller and CAO while Mahajan serves in the role of interim CFO, according to the filing. Walgreens has commenced a search for Kehoe’s successor.
Dive Insight:
Kehoe has served as the Deerfield, Illinois-based company’s CFO for five years, according to his LinkedIn profile. Prior to joining Walgreens, he was the finance chief for Takeda Pharmaceutical Company, and also served a brief stint as CFO for Kraft Foods Group.
Incoming interim Mahajan is a seven-year veteran of the company, and has served as its global controller and CAO for just over two years, according to his LinkedIn page. Before Walgreens, Mahajan spent 13 years at GE Capital — a former subsidiary of General Electric — where he most recently served as its controller for a four-year period.
News of the CFO transition comes about a month after the company posted disappointing financial results for its third quarter ending May 31, which did not meet with the company’s expectations, CEO Roz Brewer said during an earnings call.
While the company reported sales grew in the quarter — increasing by 8.6% year-over-year to $35.4 billion — Brewer pointed to margin pressures that the company is facing in its full year outlook, stemming from changing consumer and category conditions and a “steeper drop off” in COVID-19 testing and vaccines since the public health emergency was declared over. The company also adjusted its full-year outlook for fiscal 2023, reducing its guidance to a range of $4.00-$4.05 from $4.45-$4.65 in order to reflect “a more cautious macroeconomic outlook.”
Walgreens is also raising its cost savings program target to $4.1 billion in cumulative savings by fiscal 2024, as well as taking “immediate actions to optimize profitability for our U.S. Healthcare segment,” Brewer said in a statement included in the earnings release.
As part of its cost-saving initiatives, Walgreens eliminated more than 500 roles or about 10% of its corporate and U.S. support office workforce, Kehoe said during the third quarter earnings call. The company is also expecting to close an additional 300 locations in the United Kingdom and another 150 in the U.S. as part of its bid to “optimize our locations and opening hours,” he said.
While the company expects its fourth quarter to be negatively impacted by factors including a higher effective tax rate and shifting consumer spending in the U.S., they also expect its adjusted operating income growth to accelerate in the quarter.
Walgreens declined to comment beyond the details included in the press release.
