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Walgreen debacle
Old 10-01-2007, 02:25 PM   #1
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Walgreen debacle

I have owned wag for 15 years and it has been a consistent performer. Today they missed earnings "big time". Any "Kramers" out there with knowledge on whether to hold, sell or buy more?
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Old 10-01-2007, 02:35 PM   #2
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I work in a property development-related industry, and we are seeing tons of new Walgreens and CVS's (among other pharmacies) being built right now. I haven't taken a single glimpse at their balance sheets, but it seems like they might be oversaturating the market and cannibalizing same store sales. Around here, there seems to be at least two competing drug stores at every main intersection (and more on the way in a city near you!). I've also noticed average store size creeping up and up. Most new stores are weighing in around 15,000 square feet, up significantly from 8-10 years ago. I guess they are looking to have a wider selection of retail items in their stores now.

Recent pharmacy growth reminds me of walmart up until this year. Walmart has slowed down to a crawl in opening up new stores - probably will see very few new stores opening in 2009, at least in the SE united states. Saturation of the market, cannibalization, and lagging YoY same store sales (from what I've heard anecdotally).
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Old 10-01-2007, 04:37 PM   #3
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I recall some cvs exec quote about how many new stores they are opening per day/week...

my pure consumer/non-research pov is that walgreens is a bit shoddier in how they run their stores than some of their competitors...it will catch up w/ them. rite aid (at the ones i've been to, up and down CA), tend to be cleaner, better organized and better staffed.
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Old 10-01-2007, 04:52 PM   #4
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If you look at the list of stocks with the biggest percent decline for the day, almost all the pharmacies made the list somewhere, with WAG at the top of the list.
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Old 10-02-2007, 06:21 PM   #5
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In Walgreen We Don't Trust - Forbes.com

Yeah, I would look at them...seem oversold....
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Old 10-02-2007, 07:40 PM   #6
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A Walgreens just opened across the street from a Publix and Krogers, a block away from a WalMart and Duane Reed Drugs. I don't get it.
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Old 10-02-2007, 07:44 PM   #7
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There is probably a buying opportunity lurking here. Reminds me of when P&G went from the 90s to the 50s in short order after a similarly trivial earnings miss. Problem is that even after the stock got whacked we are looking at a stock trading at, what, 20X earnings. Not exactly deep value territory.

I wouldn't let the "saturation" naysayers get you down. People have been saying that about WAG for years and it still has yet come to pass. Heck, there were 3 or 4 drugstores in my town and the neighboring one (total pop sub 20k people), not counting grocery store pharmacies, yet now that the WAG has opened in their midst it is our first choice ased on selection, price, location and how it is run.
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Old 10-02-2007, 07:58 PM   #8
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Quote:
Originally Posted by bright eyed View Post
I recall some cvs exec quote about how many new stores they are opening per day/week...

my pure consumer/non-research pov is that walgreens is a bit shoddier in how they run their stores than some of their competitors...it will catch up w/ them. rite aid (at the ones i've been to, up and down CA), tend to be cleaner, better organized and better staffed.
No saturation problem here in the DC area. CVS and the Grocery chains dominate. Safeway and Giant (Royal Ahold) "own" most of the prime spots. The grocery chains won't let any pharmacies open in thier spaces. If I never go into another CVS, it'll be too soon. The one's here are very disorganized, empty shelves, whacko checkout line noone can figure out who's next in line, etc. Nearest Walgreen's is 11 miles from me. There are is a new rite aid 4 miles from here. The thing I like about Wal-greens is consistent store layout. They're all the same (either left or right-handed). We used them when we lived in Indy. They used to have proprietary prescription software that made thier pharmacies more efficient and pioneered drive thru pharmacy.
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Old 10-03-2007, 10:57 AM   #9
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i saw rats in the DC CVS in the hood i used to live in!
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Old 10-03-2007, 02:13 PM   #10
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i saw rats in the DC CVS in the hood i used to live in!
Dupont Circle ?...My store for a while... Lobbyist Rat or Politico Hack Rat? ,,,some of them are rather large...
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Old 10-03-2007, 03:57 PM   #11
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Near adam's morgan...
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Old 10-04-2007, 12:36 PM   #12
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Is that close to adam's johnson?
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Old 10-04-2007, 06:09 PM   #13
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Adam made my decision, I am selling my walgreen.
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Old 10-04-2007, 07:23 PM   #14
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walgreens just opened across form the rite aid down the street from us....seems they are ready to take em out! the cvs is about 3 miles down the same road, and another is maybe 3 miles away down an intersecting road....geez....then there's another cvs just 4 miles further down the same road.....seems liek there's more than i realized!
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Old 10-09-2007, 04:27 PM   #15
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I hail from Wags home turf. Every employee I've ever known has said how hard they're pushed. Now they say they're being pushed even harder.

This is one tough company. I'm looking into buying.
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