Question

1. How sensitive is the Walgreen's company to social and environmental conditions?
2. Is the Walgreen's company committed to growth and financial stability?

Answer 1

Walgreens is the second largest U.S based pharmacy chain. Before we begin answering the question its important to know that Walgreens has two main arms (subsidaries) under its holding company mainly the retail and the pharmacy chain apart from the whole sale business. Now according to the financials, in the past couple of years since the year 2016 the retail business of Walgreens has been shrinking with net revenues dropping from $40.6 billion in the year 2016 to $38.8 billion in the year 2019. This has been majorly due to the fact that retails stores all over the country have seen dip in revenues due to increasing competition from online stores. Now Walgreens have tried to expand into the online space but they are way behind in that race and there retail business model is far away from becoming as competitive as online channels.

On the other hand their pharmacy chain has got quite the opposite results with sales increasing by $23 billion between 2016 and 2019. That trend is likely to continue in the distant future as well. The factors responsible for this growth include expansion and growth of more than 1000 walgreens stores as well as increased revenue per prisciption and also increased footfalls. Its interesting to note that the retail arm of the business attracts customers who are then also exposed to the pharmacy and thus leads to additional sales. Thus the retail business is an important part of the whole business.

Now coming to the point, Walgreens company as a whole is less sensitive to social and environmental conditions. This is because their major source of revenue almost 55% comes from phramacy chains and that part of the business is an essential business which has high importance in the lives of people. Even in the case of Corona virus pharmacies are open. Pharmacies are one of the most essential establishments required for a society's well being. The only problem that could be in their way would be when online pharmacy stores start increasing in numbers. But in that case also Walgreens is a step ahead (they have invested heavily in digital transformation)and due to their huge base and deep pockets they are likely to beat out the competition.

2. Yes the Walgreens company is commited to growth and financial stability. This can be clearly seen as they have expanded stores not only in the U.S but in other countries as well. As far as stability goes they have divested their  sources of revenue into multiple streams such as that of retail and whole sales so that in case of any one of the sources feels the pinch the other source can provide cover for the rest and continue growth. In terms of revenue thie growth has been continuous and seems to grow in the future as well.