retail news in context, analysis with attitude

The Wall Street Journal has a piece about Walgreen's "prescription for future success," suggesting that it "lies in the partnerships it has forged in the past year, giving the drug retailer a world-wide presence and powerful drug-buying clout."

According to the story, "Walgreen agreed to pay $6.7 billion for a 45% stake in Alliance Boots in June 2012, with an option to buy the rest by 2015 … By 2016, Walgreen projects the combined companies will generate $130 billion in revenue, compared with the $72 billion Walgreen reported in 2012." Even more importantly, the Journal writes, the alliance with Alliance Boots is designed to help Walgreen "lift sales, slash costs and boost earnings and margins."

In addition, the story says, Walgreen "should also benefit from macroeconomic developments such as the Affordable Care Act, which took effect in early October and aims to give an estimated 29 million previously uninsured folks access to health care by 2019. Moreover, prescription volumes are expected to rise along with the aging baby-boomer population…"
KC's View:
It is instructive how, at least in the eyes of investors, Walgreen has managed to turn the Boots investment from a negative into a positive. I do think it is instructive that Walgreen is getting more competitive as it becomes a more global entity.