Walgreens laid off employees at its Deerfield, Ill., corporate headquarters last week and won't pay bonuses to store managers this year as it works to increase its cost-cutting goal to $1.8 billion annually.
The actions come as Walgreens, which has 18,750 stores worldwide, grapples with changes including how consumers use pharmacies.
More than 100 employees in the Deerfield office lost their jobs, according to a source with knowledge of the situation.
Walgreens spokesman Jim Cohn declined to comment on how many employees were involved, though Walgreens Global Chief Financial Officer and Executive Vice President James Kehoe said during an earnings call Monday morning that job cuts were made last week. Kehoe said "additional restructuring" is underway in the company's retail pharmacy international and pharmaceutical wholesale divisions.
Cohn declined to give more details on the "additional restructuring" after the call. He said the corporate cuts do not affect store positions or locations.
"We are modifying our corporate support office structure to drive organizational efficiencies and reduce our cost base, while promoting investment in truly differentiating capabilities," Cohn said in a statement.
Affected employees are eligible for severance, he said.
Walgreens also told store managers Monday that they will not get bonuses this year, according to a memo sent to store managers and obtained by the Tribune. The move comes after the company significantly cut the bonus amounts received by store managers and others last year.
"Walgreens and other WBA (Walgreens Boots Alliance) segments did not meet their adjusted operating income targets for 2019, and as a result, there will not be a bonus payout for bonus eligible team members this year," according to the note, which was signed by Alex Gourlay, Walgreens co-chief operating officer and president.
Those bonuses can be tens of thousands of dollars each. Store managers and others receive the annual bonuses based on a number of factors, including individual, store and company performance.
Walgreens leaders also announced a new goal Monday to slash at least $1.8 billion a year in costs by 2022 _ more than the earlier announced goal of $1.5 billion a year. The original cut-cutting goal, announced in December 2018, was $1 billion. It was raised to $1.5 billion in April.
"We must not only reduce cost to become the leanest operator, but we must also save money to generate the investment dollars needed to fuel long-term capabilities and growth," Kehoe said on the earnings call Monday.
Walgreens previously announced plans to close 200 of its stores, starting this fall.
Walgreens and other retail pharmacies face pressures related to reimbursements for medication and working to better appeal to consumers. Walgreens has focused on revamping its business by offering more reasons for customers to visit its stores, such as an emphasis on beauty products and conveniences such as Kroger grocery pickup in some locations. It's also been working to modernize its pharmacies and increase its digital presence.
