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  • rgsam54 rgsam54 Oct 13, 2008 11:50 AM Flag

    The Essential Problem with Walgreen

    On Expansion in Hawaii. Just looked it up. Walgreens has plans to open about 25 to 30 stores. Look on Google, Walgreens stores in Hawaii. Star Bulletin has a nice article on expansion. As soon as Walgreens masters the high priced area of Hawaii which also gets alot of visitors from Japan. Just like their expansion into New York.

    • Here's the deal and the reason Walgreens needs to look outside for a new CEO. The company planned to have 5 stores open in Hawaii by now. They still have only one. Let's assume that CVS's bid for Longs put things on hold until Walgreens could figure out a response. There-in lays the problem. Longs is the dominant drug store chain in Hawaii. Walgreens could have bought the Hawaii market by making the initial offer for Longs. They didn't. Why not - because the Walgreen culture never believed in growth by acquisition. They wanted all of their locations to be pristine Main and Main sites. So now CVS is going to be their primary competitor in Hawaii and they are a far more imposing operator than Longs. The inability to anticipate that CVS might try to acquire Longs, especially given their history of making large acquisitions, is pathetic. They obviously didn't think there was a realistic chance that CVS would buy Longs or they would have made the first offer instead of reacting to the situation.

      Walgreens is one of the best retailers in the country. The stock is clearly under priced. But if they want to regain leadership in the industry they must find a leader that doesn't carry the cultural baggage that will come with any of the current executives.