This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Walgreen Shakeup From Investor Pressure Due by August

Investors like Jana want Walgreen to consider expanded stock buybacks and changes to the company's retail operations and balance sheet as a means to improve overall profitability.

Jana believes better performance in the front-end of Walgreen's stores where non-pharmacy goods are sold such as beer, deodorant and the like, could help improve the company's margins. Compared with peers, Walgreen's appears to be lagging, with EBIT (earnings before interest and taxes) margins about a third lower than its biggest rival, CVS Caremark. Alliance Boots EBIT margins, meanwhile, are roughly double those of Walgreen's.

It is still unclear what changes Walgreen is willing to consider and what may prove too complex or risky in the eyes of the company's board of directors. On Tuesday, Walgreen said it would detail operational, management and capital structure changes this summer.

"Walgreens board of directors is moving forward toward consideration of the second step in the Walgreens-Alliance Boots strategic transaction, including determination of timing and structure, combined management teams, cost reduction initiatives and potential changes in the company's future capital structure," Walgreen said in its fiscal third earnings on Monday.

The most controversial decisions are likely to surround management decisions of the combined company and whether or not to incorporate abroad. Walgreen CEO Gregory Wasson wouldn't directly say whether the company announces an inversion transaction in July or August.

"We are looking at everything. It is complex and it is all interdependent," Wasson said of the company's future.

Because Walgreen will be unveiling what may amount to sweeping change later this summer, the company is suspending its fiscal 2016 guidance. However, Walgreen did confirm synergies in its merger with Alliance boots will exceed $1 billion by 2016. Jana, at a recent conference, noted that the initial $1 billion synergy guidance appeared to be conservative.

Walgreen shares were trading over 2% in early Tuesday trading on the company's weak third quarter results. Shares, however, have gained over 25% year-to-date and 50% over the past 12 months.

>> Read More: Hedge Funder Sees KKR's Next Deal In Washington Mutual's Shell

>> Read More: Pfizer Can Stay in Dow After British Move

>> Read More: TheStreet's Top 5 Dealmakers

-- Written by Antoine Gara in New York

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs