WALL STREET JOURNAL.
Stefano Pessina to Step Down as CEO, Become Chairman
Drugstore chain’s James Skinner is stepping down as executive
chairman; shares fall
Walgreens Boots Alliance CEO Stefano Pessina is stepping down
after five years in the role.
PHOTO: LUCY HEWETT FOR THE WALL STREET JOURNAL
Sharon Terlep and
Updated July 27, 2020 1:42 pm ET
Walgreens Boots Alliance Inc.
said Stefano Pessina will step down as chief executive, kicking
off a search for a new leader at the company as the coronavirus
pandemic has dented profits and complicated a turnaround.
Mr. Pessina, a 79-year-old Italian
billionaire and one of the drugstore chain’s largest single shareholders, took
over five years ago following the merger of Walgreens
and European pharmacy chain Alliance Boots.
Walgreens, the largest U.S.
drugstore chain by stores, said Monday that Mr. Pessina will remain CEO during
the search for his replacement. He will become executive chairman upon stepping
down, replacing James Skinner, who will remain on the board.
Even before the coronavirus
outbreak, Walgreens and rival CVS
were dealing with smaller profits from prescription drugs and competition
from online rivals that have hurt retail sales. Illinois-based Walgreen
responded by cutting costs in its home market and last year said it was closing
The pandemic has put further
pressure on drugstores, as patients put off visiting doctors and other health
providers, which has cut into prescription sales. Lockdowns have also reduced
stores visits and retail sales.
Walgreens this month said it was
cutting about 4,000 jobs in the U.K. and suspending stock buybacks as demand
fell off in its international business. For its quarter ended May 31, the
company said the Covid-19 pandemic sliced
off $700 million to $750 million in sales, with most of the effects
tied to its global retail-pharmacy business.
Where CVS has built itself into a
health-care behemoth through acquisitions of pharmacy benefit manager Caremark
in 2006 and insurer Aetna Inc. in 2018, Walgreens shifted away from all-out
acquisitions came after unsuccessful attempts to buy Humana and
rival Rite Aid
Mr. Pessina in recent years has
championed a strategy of partnerships, with Walgreens teaming up with companies
ranging from insurer Humana Inc. to grocer Kroger Co. In June, the company
announced a deal with primary-care provider VillageMD to attach
physician offices to hundreds of U.S. drugstores.
Walgreens’s efforts have yet to
deliver higher revenue and profits, but Mr. Pessina has urged Wall Street to be
patient. Walgreen shares are down nearly 30% in the past year while CVS shares
rose 14% in the same period.
Mr. Pessina, who has a degree in
nuclear engineering, worked for several years in academia before taking over his
family drug-distribution business. He has claimed to have completed more than
150 acquisitions as he consolidated the business around Europe.
One of those acquisitions was a
company headed by Ornella Barra, who has been Mr. Pessina’s life partner for
three decades. Today she is Walgreens’s co-chief operating officer.
In 2006, he merged his business,
then known as Alliance UniChem, with the U.K.-based Boots drugstore chain. A
year later, he joined with KKR &
Co. to buy out the company and take it private for $18.5 billion. The deal
making continued, and in 2012 Alliance Boots agreed to sell a 45% stake to
Walgreens for $6.7 billion. Last year, Walgreens bought
the rest of Alliance Boots for around $14.7 billion.
Mr. Pessina became the company’s
executive vice chairman in January 2015, a month after the Alliance Boots deal,
and subsequently served as interim CEO before being confirmed in the role in
June 2015. Mr. Skinner, who once led
Corp., has been
executive chairman of Walgreens since January 2015.
The company’s shares fell 2.4% in
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