Walgreens

New Leases Standard About to Really Blow Up Drug Store Chains’ Balance Sheets

We are T-minus 155 days away from financial executives at U.S. public companies saying a couple of Hail Mary’s, keeping their fingers and toes crossed, and hitting the “go” button on adopting new accounting rules for reporting leases. Accounting Today reported that two popular drug store chains top the list of Fortune 1000 companies with […]

Some People Aren’t Too Concerned About the Walgreen CFO’s Second DUI

Yesterday we shared with you the unfortunate tale of Walgreen CFO Wade Miquelon picking up his second DUI in just over a year. While Mr. Miquelon is obviously responsible for his own actions, this whole mess could have been avoided if WAG would just splurge a tad and get him 24/7 car service. Sure you might catch some shit from Footnoted but isn’t that better than people getting hurt?

Anyhoo, most of the coverage on this story is in and around Chicago but naturally, analysts that cover the company were asked about the whole ordeal and frankly, since jumping behind the wheel after a few highballs doesn’t seem to have any effect on Wade’s professional capacity, it’s really NBD:

Dereck Leckow with Barrington Research […] sees no reason for investors to be concerned.

“Certainly, it’s rather embarrassing, but he’s not been found guilty of anything at this point,” said Leckow.

“At this point in time, it’s not something to be concerned about,” he concluded. Leckow has an “Outperform” rating on Walgreen shares and a $46 price target.

The risk for investors, if anything serious were to result from the latest charge, is that Miquelon is regarded as key to restructuring that’s been going on at Walgreen.

“Wade has been very valuable for the company’s cost-reduction efforts,” observes Scott Mushkin of Jefferies & Co. “If there were any problem that would take him away from his responsibilities at Walgreen, that would be a negative,” said Mushkin.

As we noted yesterday, WAG isn’t commenting on this “personal matter” but some people are wondering aloud about Wade’s decision-making ability:

Companies have to disclose “events that occurred during the past 10 years and that are material to an evaluation of the ability or integrity” of an officer. This includes whether the person “was convicted in a criminal proceeding … (excluding traffic violations and other minor offenses),” according to the Securities and Exchange Commission.

So the question becomes when does such an issue stops being a “personal matter” and starts becoming a “material” one. And what does it say about a person who makes such repeated mistakes, risking himself and others in the process? Can shareholders trust him with running the finances of their company?

The answer is, it depends.

“Some companies might have disclosed the second arrest right away; some might have said something somewhere,” said Edward Best, a partner at law firm Mayer Brown. “Other companies could reasonably have concluded, ‘Hey, the guy still showed up Monday morning.’ He’s still able to fly to New York to meet with rating agencies, investors and bankers. It’s not a material issue.”

One thing is for certain – Miquelon is losing his license for three years effective November 10th, so Walgreen has a couple of weeks to arrange for that car service.

Walgreen: Street Unperturbed By CFO DUI Arrest [Barron’s]
Walgreen CFO Arrested on Drunk Driving Charges … Again [Daily Finance]
Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]

A Sign of Things to Come? Walgreen Outsourcing 150 Accounting Jobs

Apparently this is part of WAG’s ‘Rewiring for Growth’ initiative. And by ‘rewiring’ they mean cutting $1 billion in expenses by next year (no pressure).

As many as 150 accounting jobs could be eliminated at Walgreen Co.’s Deerfield headquarters within the next 10 months as the drugstore giant outsources the work.

The job losses result from Walgreen Co.’s agreement with process-outsourcing firm Genpact, based in India, to take over certain accounting work.

Genpact has agreed to acquire Walgreen’s accounting office in Danville, Ill., where 500 former Walgreen employees have become employees of Genpact.

Another 300 Walgreen jobs, including the 150 in Deerfield, will be affected by the move. The remaining 150 jobs are scattered among Walgreen accounting offices nationwide, a Walgreen spokeswoman said Monday.

An unspecified number of Walgreen accounting department employees who remain employed will be shifted to other jobs or see their positions changed drastically, the Walgreen spokeswoman said.

Problem is “positions changed drastically” could be anything from the mailroom to working the counter at your respective local store on Christmas Day.

Walgreen outsourcing deal to cut as many as 150 accounting jobs [Chicago Sun-Times]