Walgreens, WBA, CEO has said anti-shoplifting strategy backfired: ‘When you lock things up…you don’t sell as many of them’

Amid a challenging retail environment, Walgreens Boots Alliance outlined its strategic pivot during its Q1 2025 earnings call. Despite a 23% year-over-year drop in adjusted earnings per share (EPS) to $0.51, the company surpassed expectations, driven by strong cost management and solid performance in U.S. pharmacy services. CEO Tim Wentworth reiterated the company’s focus on a “retail pharmacy-led turnaround,” emphasizing strategic store closures, improved customer engagement, and a strengthened commitment to health and wellness products.

As part of its strategy, Walgreens plans to close around 450 additional stores in 2025. Wentworth highlighted that stores slated for closure underperform those remaining open by approximately 250 basis points. Addressing the issue of inventory shrinkage—up 52% between 2020 and 2021—he described it as a “hand-to-hand combat battle.” Despite investing in heightened security measures, these efforts have largely been ineffective. Wentworth candidly noted the downsides of locking up frequently stolen goods, stating, “When you lock things up, you don’t sell as many of them. We’ve proven that pretty conclusively.” He also hinted at “creative” solutions being developed to mitigate shrinkage and improve in-store shopping experiences without over-relying on locked displays.

The company’s “footprint optimization program” aligns with successful contract renegotiations for 2025, focusing on better reimbursement structures and excluding high-cost drugs like GLP-1s. However, retail sales remain a challenge, with comparable sales declining 4.6% in Q1. This was attributed to a weaker cold and flu season and ongoing pressure on consumer discretionary spending.

To address these headwinds, Walgreens is shifting toward a growth strategy centered on health and wellness. This includes new product categories such as superfoods, sports nutrition, and women’s wellness, along with an expanded portfolio of private-label offerings. One notable addition is a new line of diapers, which has received positive feedback—even from Wentworth’s own family. “My youngest daughter has a brand-new baby,” he shared. “She’s thrilled we’ve launched our own brand diapers because she trusts they’ll work without causing blowouts at her house.”

Additionally, Walgreens is investing in technological advancements like digital check-ins for pharmacy customers and expanded micro-fulfillment centers to streamline operations and enhance the customer experience. Despite the challenges, the company reaffirmed its full-year 2025 adjusted EPS guidance of $1.40 to $1.70, signaling confidence in its turnaround plan.