Dive Brief:
- Walgreens on Friday named two people to key leadership positions. Tracey Koller is the new chief merchandising officer and Sharmila Sudhakar was appointed head of Walgreens digital commerce. Both will start in their new roles later this month, the company said in a release.
- Koller will lead the retailer’s merchandising strategy across all categories. She comes to Walgreens after serving as Party City’s chief merchant. Koller also worked in merchandising and operations roles at Target and Whole Foods.
- Sudhakar will be responsible for driving digital revenue growth and strengthening omnichannel engagement across various business segments, including retail, pharmacy, photo and health services. She joins the company from Tailored Brands, where she was vice president and general manager of North American e-commerce for Men’s Wearhouse and Moores.
Dive Insight:
Walgreens’ leadership appointments come amid a turnaround for the brand.
CEO Tim Wentworth, who joined the company almost a year ago, said in a recent earnings call that “our team is very clear that we are in a turnaround.” Wentworth also said “the severity and duration of the challenges in the operating environment have only added urgency to our strategic and operational review, and we are addressing them directly.” The company announced a strategic review of every business in its portfolio earlier this year, with an eye toward maximizing growth potential and generating cash flow. Through the review, Walgreens hopes to simplify the business, find profitable growth opportunities and work to strengthen its relevant businesses.
The company reiterated that position in its announcement about the newly appointed leaders, saying they “will significantly contribute to its efforts with regard to the turnaround of the business as the company focuses on enhancing the front of store and omnichannel experience for its customers while driving in-store efficiencies.”
Walgreens in June said it plans to close a significant but as-yet undetermined number of the approximately 8,700 stores it operates in the U.S. The company said then that it was reviewing 25% of its financially underperforming locations. Wentworth said the company was on track to achieve $1 billion in cost savings this year.
In the most recent quarter, Walgreens reported net earnings of $344 million, up year over year from $118 million. The company also swung from a $477 million operating loss to operating income of $111 million for the quarter ending on May 31. U.S. retail pharmacy sales in the quarter were up 2.3%, to $28.5 billion.
S&P Global Ratings downgraded Walgreens to ‘BB’ in July, citing the company’s debt as a contributing factor. Earlier this month, the company offered $750 million in senior unsecured notes. Walgreens said it planned to use the net proceeds of the sale — about $740 million — and cash on hand to pay down about $1.16 billion in outstanding borrowings that came due this year. The new notes would be due in 2029.
