Walgreens executive says the company 'cried too much' about theft and may cut back on private security guards
Walgreens CFO James Kehoe said the company overstated theft concerns in 2022.
Kehoe said at the start of 2022 that the company's retail shrink rate had increased by 52% from 2020.
The CFO called private security firms "ineffective" and said the company plans to rely on police instead.
Walgreens "cried too much" about theft last year, according to an executive of the retail pharmacy chain.
And the Chicago-based company may even consider cutting back on private security in stores.
Walgreens CFO James Kehoe said during a Thursday quarterly earnings call that the company has seen "lower levels of shrink" in inventory in the second half of 2022. A year ago, the company said that its inventory shrink rate, or the loss of inventory attributed to theft, fraud, and damage, was over 3%, Kehoe said it is now down to roughly 2.5%.
"We're quite happy with where we are," Kehoe said.
He added that the company "put in too much" private security at the start of last year and wants to reduce their presence, instead relying on law enforcement officers: "The security companies are proven to be largely ineffective," he said.
Kehoe's comments come after months of other retailers sounding the alarm about retail theft. Walmart President and CEO Doug McMillon said in December 2022 that stores would close and prices would rise if theft levels did not drop.
Missing inventory also reduced Target's gross margin by more than $400 million in fall 2022 compared with last year, and the company expected those profit losses to grow to $600 million by the end of the fiscal year, Target CFO Michael Fiddelke said in November 2022 during a company earnings call.
The issue of theft has ballooned into a $94.5 billion problem for the retail industry, according to a 2022 study conducted by the National Retail Federation.
Kehoe's message Thursday was much calmer than a year ago, when he warned that Walgreens was "absorbing a 52% increase in shrink" at the end of 2021. At the time, he attributed a large part of the shrink to organized retail crime.
"This is not petty theft," Kehoe said in a January 2022 investor call. "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. And it's a real issue."
Do you work for Walgreens and have experiences with theft at your store? Contact reporter Ben Tobin by email at [email protected] or by Signal at +1 703-498-9171.
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