Walgreen Won't Copy-Cat Duane Reade's PL Approach, Execs Say

January 3, 2011
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Walgreen Co. doesn’t see Duane Reade, which it now owns, as a one-size-fits-all template for increasing private label sales in its drug stores, company senior executives emphasized during their quarterly earnings call late last year.

“We’re not going to just cut-and-paste what’s done at Duane Reade,” Wade Miquelon, executive vice president and chief financial officer says. “I mean what Duane Reade has done is right for Duane Reade and there are elements of that that are right at different stores and in different permutations. We’re already using many things we’ve learned [through the Duane Reade acquisition] whether it’s ‘private label’ or ‘beauty’ or ‘fresh.’ But again, there is not going to be just one cut-and- paste that goes back across the whole franchise.”

“I think the way to look at Duane Reade,” adds Greg Wasson, president and CEO, “in addition to what it gave us in New York as the leading position in that market, [is that] many of their initiatives you’re talking about really support initiatives we have in place. Private brands - we’re expanding and enhancing private brands. They’ve got some great expertise there so we’re going to bring that together and be able to accelerate that.

“Their upscale beauty, fresh food - the good thing is they really complement and enhance many of our initiatives, which will help us accelerate. So it really won’t be just a plug-and-play of 1,000 stores here, 1,000 stores there. It really depends on what makes sense across the entire footprint for us to put in place. There may be some stores where we expand grocery, there may be some stores where an upscale beauty offering makes sense and there may be others where it doesn’t.”

Walgreen posted higher-than-expected earnings of $580 million for the quarter ending Nov. 30, 2010. On the associated quarterly earnings conference call, company executives were asked by analyst Scott Mushkin of Jeffries & Co., about plans for Duane Reade.  

“We look at Walgreen and some of your stores in urban areas,  how quickly can you get some of these stores, Duane Reade-ized? And are there 1,000 stores in the Walgreen’s portfolio that can bring in most of what Duane Reade is doing? What would the costs be and how quickly could that be done?” asked Mushkin.

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