NEW YORK—Drugstore operator Walgreen Co. said Thursday it will cut 1,000 jobs by mid-year, or about 9 percent of corporate management, through a combination of voluntary buyouts and layoffs.
NEW YORK—Drugstore operator Walgreen Co. said Thursday it will cut 1,000 jobs by mid-year, or about 9 percent of corporate management, through a combination of voluntary buyouts and layoffs. The Deerfield, Ill., company said the job cuts will come from corporate and field management and won’t include store employees. The targeted workers will be able to resign or retire with severance pay and benefits based on their tenure. Starting in February, the company will begin layoffs under less favorable terms. The cuts come during a slowdown in consumer spending brought on by the U.S. recession, which has hurt retailers and led to weakness in drug sales. However, Walgreen’s December sales figures showed some resistance to the slowdown, as customers turned to its stores for supplies of basic household items. Walgreen said the moves will reduce its overhead. It did not estimate the cost of the job cuts, which will be complete by Aug. 31, the end of Walgreen’s fiscal year. The job reductions are part of Walgreen’s cost-cutting plan, which is intended to save the company $500 million in fiscal 2010 and $1 billion per year starting in fiscal 2011. Walgreen announced the "Rewiring for Growth" plan in October, and said it will cost $300 million to $400 million in fiscal 2009 and 2010. Analyst David Magee of SunTrust Robinson Humphrey said job cuts are the most efficient way for a retailer to lower its expenses. He said Walgreen is trimming management positions because it is trying to become more efficient. "It’s a mindset change, and it’s the first mindset change of this magnitude to take place at Walgreen’s in a long time," he said in a telephone interview. "It’s probably long overdue." The company had 237,000 employees as of Aug. 31, 2008. Walgreen operates 6,636 drugstores in 49 states, the District of Columbia, Puerto Rico and Guam. In morning trading, Walgreen shares dipped 32 cents to $26.71. ______ Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.