Walgreens Lays Off Undisclosed Number Of Employees In Deerfield

DEERFIELD, IL — Walgreens laid off workers at its Deerfield headquarters last week as part of its campaign to reduce its annual expenses. The company also increased the goal of the cost-saving initiative it calls its "Transformational Cost Management Program" from $1.5 billion to $1.8 billion. It said the program is on track to "save to invest to grow."

In an earnings call announcing fourth quarter results Monday, company officials reported Walgreens' profit fell 55.2 percent compared to last year. Net earnings for fiscal year 2019 were down 20.7 percent compared to last year. The company's free cash flow fell from $6.9 billion to $3.9 billion, which it attributed to the costs of integrating Rite Aid stores, non-recurring tax benefits and transitional tax payments, legal settlements and implementing the cost management program.

"As part of our Transformational Cost Management Program announced last year, we are modifying our corporate support office structure to drive organizational efficiencies and reduce our cost base, while promoting investment in truly differentiating capabilities," Walgreens spokesperson Phil Caruso said, commenting on company's Deerfield layoffs. "This measure does not impact any store positions or locations."

In August, Walgreens announced it plans to close about 200 stores around the country in a filing with the U.S. Securities and Exchange Commission. At the time, it estimated the price tag of its cost-reduction program would be between $1.9 and $2.4 billion.

More than 100 Walgreens employees in the Deerfield area were notified last week their jobs were being eliminated, according to the Chicago Tribune, which first reported the layoffs. The company has also done away with annual bonuses this year, citing a failure to meet 2019 income targets, according to a memo from Walgreens' chief operating officer obtained by the Tribune. Multiple sources told the paper the elimination of bonuses was unprecedented in their tenure.

"All of the affected employees are eligible for severance and outplacement services," Caruso said. "Throughout this process, our goal is to treat all of our employees respectfully and fairly."

Jim Cohn, Walgreens' corporate media relations director, provided a statement to CNBC saying the company is reducing its global IT and digital teams and has completed a review of its real estate holdings.

"The additional restructuring is underway in our retail pharmacy international, and pharmaceutical wholesale divisions are also working hard to define our new vision," Cohn said.

In its fiscal year 2019 results, Walgreens announced sales from pharmacies were up but revenue from nonpharmacy products was down, which it said was "entirely due to continued de-emphasis of tobacco."

The company's stock has fallen almost 19 percent in value so far this year amid questions from investors over the company's strategy of competing with e-commerce and brick-and-mortar rivals like Amazon and CVS, CNBC reported.

Last week, the company announced it would pay out a dividend of 45.75 cents per share in December. That's up 4 percent from the same quarter in 2018. Walgreens said it has paid a dividend every quarter for more than 87 years and raised it for the last 44 years.

Earlier: Walgreens To Shutter 200 U.S. Stores In Campaign To Cut Costs