Walgreens executive admits retail theft concerns are overblown: ‘Maybe we cried too much’
One year after calling organised retail theft “gangs” a “real issue” that forced store closures, a topic that animated right-wing media tabloids over the the last two years, a top Walgreens executive said the pharmacy retailer’s fears may have been overblown.
“Maybe we cried too much last year,” Walgreens chief financial officer James Kehoe said during an earnings call on 5 January, according to CNBC. “We’ve put in incremental security in the stores in the first quarter. Actually, probably we put in too much. We might step back a little bit from that.”
Mr Kehoe said shrinkage – the difference between the company’s inventory recorded on its balance sheet and what’s actually on the shelves – amounted to 3.5 per cent of the retailer’s total sales in the last year. Those losses have stabilised and are closer to the “mid two and a half range,” CNBC reported. That figure accounts for things that were shoplifted but also includes damaged and lost items.
Over the last two years, Walgreens was among retailers raising the alarms about theft in their stores, as brazen viral videos and a growing perception of lawlessness within Democratically run cities proliferated across local news and right-wing media outlets ahead of 2022 midterm elections.
“This is not petty theft. It’s not somebody who can’t afford to eat tomorrow. These are gangs that actually go in and empty our stores of beauty products,” Mr Kehoe said during a first-quarter earnings call one year ago. “As with all of our peers, it’s a real issue.”
Stores locked down certain items on their shelves and the company spent a “fair amount” to crack down on theft, according to Mr Kehoe. But private security has been “largely ineffective” and the retailer now for the most part relies on local law enforcement to handle thefts, he said.
“We’re quite happy with where we are,” he said.
A 2022 study from trade association the National Retail Federation claimed that organised retail crime at retailers surged over the previous year, allegedly driving inventory shrink and resulting in $94.5bn in losses.
National reporting of organised theft rings was particularly acute in San Francisco, where the issue dominated coverage of a recall effort targeting now-former San Francisco District Attorney Chesa Boudin.
Data released by the San Francisco Police Department in October 2021 did not support Walgreens’ claim that rampant theft forced the retailer to close five stores in the area.
On average, stores reported two shoplifting incidents a month from 2018 to their closures in 2021.
Other retailers including Home Depot, Target and Walmart also have pointed to retail theft as a threat to their businesses, threatening to close locations, even while posting record profits during the Covid-19 pandemic.
Walgreens sales jumped to $33.4bn in its fiscal first quarter, according to its reporting. It also reported $3.7bn in losses, largely driven by a $5.2bn settlement that the company was ordered to pay related to opioid litigation, after several states accused the pharmacy of mishandling prescriptions.
