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Walgreens Staff Reduction Won't Affect Fleet

January 19, 2009

DEERFIELD, IL Walgreens announced it is offering early retirement and severance programs to employees in corporate and field management positions as part of its Rewiring for Growth initiative.

Approximately 1,000 positions (about 9 percent of those currently employed in corporate and field management) will be eliminated by the combination of voluntary and involuntary programs in fiscal 2009. These programs will not impact store personnel.

Rewiring for Growth is one of the company's key strategic initiatives designed to leverage the value of its core businesses — to earn "more from the core" for its shareholders. The project, first announced at Walgreens Analyst Day meeting in October, will align the company's cost, culture and capabilities to enhance customer service and satisfaction levels for shoppers, patients and payors.

To reduce overhead, including the number of people employed in corporate and support roles, Walgreens is enabling eligible employees to voluntarily resign or retire from the company with both severance pay and benefits coverage based on years of service and retirement eligibility. This program is being offered in advance of a supplemental involuntary separation program that will begin in February. The company intends to reduce to the extent possible the number of involuntary separations by offering a more favorable voluntary program first. Under the voluntary program, eligible employees can receive more weeks of severance pay and continuation of retiree medical benefits if they meet certain age and service requirements.

When questioned about how the reductions may affect fleet, Michael Polzin, Walgreens Corporate Communications told Automotive Fleet, "While some corporate management in our transportation area will be eligible for the voluntary program, it won't have an impact on our fleet."

Walgreens expects to incur costs of $300-$400 million over fiscal years 2009 and 2010 as it implements Rewiring for Growth. Fifty percent of the project's benefits are expected to accrue beginning in fiscal 2010, with the full $1 billion in targeted annual savings beginning in fiscal 2011.


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