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The February "action" looked more to me like people trading stakes and voting rights than actually buying into Rotech. Could be interpreted as a defensive reaction to the $25M financing deal and the restrictive covenants that could compromise shareholder's rights in certain situations, up to and including in a re-org or restructuring.
JMHO.
Looks to me like the original contract was awarded in 2010 and this is a re-up. Last year's 10-K (Annual) speaks in detail, as I recall it, about the VA business and how contracts are awarded and refreshed over as long as a 5 year cycle.
If you want to comment on all the February filings at Edgar, looks like you missed quite a few.
I watched a lot of the senate hearing. Carl Levin showed some gonads in grilling Ina. It was fun to watch.
I have no skin in this game so I just enjoyed the theatre.
GLTA,
Yank
That is an old conract with VA. It renews, annually, and it is neither a surprise nor new business or any more favorable terms.
robb, the vending machine analogy is topical, although I think you were being facetious. The concept was tested in Japan going back five years or more ago and has actually spread to a lot of urban centers, including throughout the Tokyo subway system where consumers can purchase hundreds of popular Rx's. There's a link on You Tube if you are interested.
People can scoff at the idea, but there's a strong clue in the demise of Blockbuster and other former high-flyers that, as I have been saying, all along: COST IS KING! Brow Bar, anyone?
GLTA,
Yank
robb, I am not a big UBS fan and I do not follow the analyst that issued the upgrade, but the content of his rationale ignored the reality of the situation, in my book. The outflow of funds from equity investors in the market has been huge over the last 5 years. The tide is finally starting to turn; equity investing is in the early stages of a recovery, both from retail investors and 401K/IRA contributions. A skittish market likes established, conservative, divvy-paying large caps like Walgreens. About 2/3 of WAG's float is held by Insty's and Funds where Wasson's breath or Wade's sobriety matter less than the conservative appeal of a power brand and a logical sounding growth story (A-B).
I think UBS made the right call for the wrong reasons. But, what does it matter, anyway?
It could all unravel, over time. Then, again, it might not. But the near term looks positive, to me,and the headwinds that you and I both fear are still below the radar until more concrete data is revealed.
GLTA,
Yank
I have stated on several occasions that I think the next Q will be strong and I see the S/P as trending above market for the next 90 days, barring surprises. From that point, on, it's all about A-B.
I was very surprised by the recent S-8 content.
GLTA,
Yank
As I suggested to milo the other day, I think Q2 numbers have a good potential for an uptick. My "gut" is nothing more than that, but the flu numbers should be helpful and a lift to margins. The rest of the story all boils down to A-B/Boots contribution, if any, the "savings" in the billion dollar consolidation sweepstakes (if any is ever achieved) and attainment of the results promised for numerous other earlier M&A activities that were supposed to be accretive to earnings but have yet to gain clarity and due recognition in any concrete way... home infusion, Duane-Reade ,clinics, drugstore.com, blah/ blah/ blah.
I think Q3 & Q4 are the breakout quarters, up or down, for Walgreens. The next C/C will be a tarot reading of the results for those two pivotal quarters.
My biggest disappointment in FY13 is Skinner's lack of visible impact on Walgreens business plan. I had great hopes for this appointment. To borrow a line from McDonald's current TV campaign, his impact-to-date has been totally "Fishy, Fishy"...
GLTA,
Yank
robb, I did not see the report you reference, but I did read some highly detailed Red Chip dosssiers on both healthcare and Rx/pharma in China which were both interesting and very different from the norms, even in single-payor systems. Chinese medicine is a blend of modern technology with centuries-old treatments like accupuncture and homeopathic potions operating well outside the limits of FDA-controlled medication. It is a blend of old and new, with a splash of science and a splash of near-witchcraft thrown in for good measure.
What perspective did you gain from the KKR paper? I thought that China was a tiny portion of A-B/Boots market presence.
I certainly hear what you say about Goldman-Sachs... I am way too small a fish to be anything but bait in their "whale investor" environment. My IRA is managed by Janney, Montgomery,Scott by the same advisor I had for years at Dreyfus. The guy is just super. My other managed portfolio is placed with Sterling Capital and this is where I have refocused a lot of dollars to spread risk as I get older.
I actually made just south of 30% in 2012, much of it on mReits, with a blend of divvy returns and S/P appreciation. I am now out of mReits and will likely remain out as the concern for higher interest rates looms on the in flationary horizon. That was a great gravy train to ride for several years as the talking heads screamed "risky" and "avoid" while my portfolio about doubled in my contarian position. But all good things eventually come to an end, just like I sold the last of my Amazon which I held since $10.50/share; best buy-and-hold I ever made!
Hey, good luck on your trades. There are some Surgi-Center small caps spinning in the venture capital space. I'll e-mail you if I decide to latch onto any in the months ahead. One good one looks like an IPO late in 2013 with talented players at the helm. Keep you posted.
Yank
robb, I have two managed portfolios, one IRA and one not, each with excellent financial advisors. One achieves a 10% return and the other about 14% on a 10 year basis. I have moved significant capital into these 100% equity investments, though I retain my Schwab account and continue to invest opportunistically in stocks I favor... just in smalled $ increments. I own zero bonds in any form.
Part of the reason for my restrategizing is the time commitment my former equity portfolio took to manage, a commitment that I choose not to perpetuate, and part is a belief that better future opportunities exist in global equities, ETF's, commodity and currency plays... all areas where my domestic trading experience has scant relevence. I retain my interest in the healthcare sector and will continue to invest there, opportunities permitting. Never fear, my family's position in WAG stock assures I will maintain some focus here!
I urge you to consider carefully your projection on hospital M&A. This entire sector is overbuilt in many markets, redundant in costly technology investments (under-utilized), vulnerable to spend reduction mandates and poised to lose higher-margin uninsured patient fees-for-service as Obamacare takes hold. The most profitable part of any hospital's environment is the O/R which is increasingly under pressure from much lower cost Surgi-Centers that can perform nearly all but the most complex procedures on an outpatient basis. The latter, emerging channel is the area I am considering for investment. Just a tip...
GLTA,
Yank
Government healthcare spend is clearly on the radar as Obama and Republican Senators look to rebalance the Sequester cuts with saner alternatives. One of the more interesting bills in the House is the Bachmann Bill on VA spend which is pouring yet more gas on the fire, albeit the direction is split between medical spend and veterans double-dipping by accepting both full disability pensions and concurrent SS pensions at enormous cost to taxpayers (there is a reason why so many DIS/VET license plates are found on new Cadillacs).
I would not be long or short Walgreens at this time as better plays exist. I am spreading risk by going heavy in mutual funds and lowering my risk in individual equities. I am less cash heavy, but still sitting on about half liquid. NO BONDS. Ready to p-l-a-y when the inevitable correction occurs. Won't be long!
GLTA,
Yank
milo, I think the Q2 numbers are probably safe since 2 of the 3 months had strong flu shot numbers and the margins there are superior to average Rx returns. If there is going to be a problem, I'd be looking toward Q3 & Q4.
It's all a crapshoot until the Alliance-Boots deal gains some clarity, good or bad.
Had to pay off on my bet, which I lost. Wasson & Co. are all still there. No losers, though. Great bottle of wine. Ate at Flemings instead of Mortons and was glad we did... much better than either Morton's or Ruth's Chris (with all due apologies to my former friend Arnie Morton). Hey, wickedone, did you ever eat at Gene Sage's In Chicago? I loved that place. I was a charter member of their "Cloak & Dagger Club" when my dad took me there as a teenager and I ate there for years, interspersed with Gene & Georgetti, The Chop House, The Butcher Shop, Lawry's, Eli's, and, of course, Hy's of Canada which was only eclipsed by their prime steakhouse in Calgary/Alberta.
GLTA,
Yank
You are most welcome. Your views as an employee would enrich the content of this board. Feel free to comment, without compromising anything confidential. This discussion could use some fresh perspective.
Yank
Mladie, the S-8 was filed with the SEC on February 8, 2013, and is still up on Edgar. I'd like to help you out with a link but IHub does not allow it, so I would suggest putting Edgar Online in Google, then when it comes up enter WAG for Walgreens and look for the link. You can also get to it via Yahoo Finance; go to the WAG board and click on "SEC" in the left hand margin. When the page comes up, scroll down to the bottom and click on "All SEC Reports" (or similar nomenclature), then click on the S-8 report.
It's all there. I don't make stuff up.
GLTA,
Yank
robb, if you read the S-8 there are 46 million shares being issued to provide resources for the 2013 Walgreens Company Omnibus Incentive Plan as approved by shareholders at the annual meeting. This is an enhancement to earlier award programs previously authorized but not issued in prior years which I estimate at another nearly 10 million shares. That's a lot of vigorish for employee rewards! The 46 million new shares will definitely be dilutive, as issued.
Let's see... $2 billion in potential employee share awards... that's like over 2% of total revenues, not profits. Unless I am missing something, or unless the shares are doled out over many, many years, THIS IS INSANE!
GLTA,
Yank
Just compared Rite Aid's February numbers with Walgreens figures from earlier in the week. Very similar results and rationale. The flu euphoria has certainly petered out, industrywide. The Costco numbers from yesterday were a lot more positive and may indicate a retail shift is taking place.
GLTA,
Yank
The L&R deal was announced last November and involves the HBC wholesale business that came along with the USA Drug acquisition by Walgreens from the Lafrance family in Pine Bluff, Arkansas.
In the context of Walmart's earlier announcement, I didn't see Walgreens February numbers as definitively bad, although I smell a rat in the flu references, one of which says flu revenue was flat to down and another which said the # of vaccinations was way up (each flu shot counts as one Rx in WAG accounting practice).
Anyone see the Time Magazine issue on healthcare entitled "A Bitter Pill to Swallow"? It was exceptional, fair, balanced and comprehensive reporting and I recommend it to everyone. It is still available, on-line. The segment devoted to prescription drug costs was very eye-opening.
GLTA,
Yank
Nah, I only get the spam windows when I come to IHub. I have advanced Norton and malware protection. It could be coming from Comcast, but I think that is unlikely since the same thing happened before I moved here with a different Internet Provider.
The advertisers whose crap keeps coming up are all linked on the very bottom of the IHub opening page. Every "free" website needs to monetize its site with advertising, but IHub seems to me to have crossed the line.
GLTA,
Yank
Question for the WAG board... anyone else having a problem with IHub advertisers opening up spam windows when you clicked on no offer icons or pop ups on the opening page? One advertiser, Lombardi Publishing, keeps taking over my computer with offers for newsletters, videos and so forth. When I go to click on the box where you enter the WAG symbol to go to the Walgreens board the screen flickers and a window gets opened, sometimes behind the IHub screen, sometimes taking over the IHub screen and even playing recorded sales messages. When I go to turn off my computer there are sometimes two or three spam windows I have to X out of before I can shut down my laptop.
Dan in IHub Technical Support is telling me it is my computer. I don't think so. Anyone else having this issue? I am not posting much here because of this annoyance.
GLTA,
Yank
Milo, I just forgot to comment on the Bogle. Sorry. It was actually quite good and far more complex than what I would expect for ten bucks. Hey, are Bern and Gertie still alive? I would never try and pick a wine off Bern's wine list at the dinner table; have you ever seen how HUGE that tome is? You never get to the entree!
Yank
Robb, did you read Adam Fein's recap of the CMS study on retail pharmacy costs and margins that he published back in October, 2012? It is still up on his website. There is finally some transparency to the longstanding debate on what is and is not profitable in retail Rx channel segments. Among the myths exploded are the incorrect claims that Walmart's $4 Rx campaign is a loss leader and that Medicare reimbursements are insufficient to be pressured for reduced costs. The study actually sheds light on the largesse of Medicare and the surprising result that its reimbursements average 18% higher than third party payers for identical brands and generics.
You can look for this disparity to be neutralized, sooner rather than later.
The CMS is reshaping the debate on healthcare spend and much of its direction appears squarely at odds with Walgreens direction to broaden its domestic retail platform to include all these new opportunities for non-pharmacy retail revenue streams that come with added cost and have little or no connection to wellness delivery. As one example, beautiful eyebrows or chic fingernails bear no improvement to health or life expectancy.
GLTA,
Yank
Walgreens SGA vs. The Federal Deficit... never before has so much been spent by so few on so little! The similarities are considerable. When the Feds face pressure, like the Sequestration mandate, they bleat and scream "pain to America" if this occurs, and middle America will rue the day these cuts go through. I watched Ray Lahood on Meet the Press this morning and almost threw up at his threats of flight delays and such if the FAA budget was cut by a whole TWO PERCENT. That is total, utter, crap. Show me a senior manager that can't find 2% in spending cuts anywhere in either government or the private sector and I'll show you a manager that needs to be immediately dismissed.
Similarly, every time someone asks Walgreens to accept lower reimbursements that its competitors already accepted, the WAG C-suite bleats and moans about customer inconvenience and unfair, "mean old Mr. Reimbursement" while, all the while, fattening up the cost of Rx care by fancying up neighborhood drugstores with drive-throughs and food sections, and urban locations with bank vaults turned into brow bars and sushi restaurants for an upscale aura.
The mailorder cost advantage is now on the radar in retail pharma, Medicare and Medicaid Rx spend will force a huge shift on maintenance meds, and the contrarians like Walgreens that flaunt retail excess that bloats SGA and costs of doing business will be left behind as CVS, ESRX and UNH clean Walgreens clock in its core market.
That's my opinion and I am sticking to it! The low cost operators will survive and grow in market share. Even Rite Aid may become a survivor, if it can repay its debt before interest rates rise. Walgreens future with no change in course will likely include an abandonment of the pharmacy in its new stores that become a polyglot of Ulta, Starbucks, Whole Foods and P.F. Chang's in upscale areas in America and Europe. Medicare/Medicaid Rx spend is a huge chunk of the Rx market... about 55% of Walgreens pharmacy revenue, by recollection. If the reimbursement rules shift away from WAG's bloated (my opinion) SGA-driven/high-cost structure to a much leaner model including mailorder, WAG will become "the odd man out" in eligibility for pharmacy biz from entitlements that seek cost optimization.
Looks to me like the investment opportunities are in PBM's with mailorder strength, Costco and the drug wholesale trade that caters to Independent Pharma which has no corporate overhead load.
All JMHO. GLTA,
Yank
The CMS (Center for Medicare Services) proposed a new rule which would apply to Medicare Advantage and Part D coverage for prescription drugs in 2014. They recommended adopting the same MLR, or minimum loss ratio standard that The Affordable Care Act mandates for clinical and medical reimbursement. In a nutshell, this means that at least 85% of what Medicare reimburses providers for must go directly for patient care (cost of Rx, cost of dispensing) and only investments in technology and training that improve efficiency and eventually lower care cost are permissable. Medicare will no longer allow more than 15% of its reimbursement to go towards marketing costs, executive compensation or expenses that do not drive lower cost of care. My interpretation is that this caveat also includes dividends and share buybacks.
The MLR that originally was crafted on medical spend in The Affordable Care Act was what set off a lot of the medical community like the AMA, big insurers and for-profit hospital groups and led to huge PAC spending in the last election as all these fiefdom's in the healthcare pyramid fought to preserve their riches at the expense of Medicare's ability to serve clients. The final ruling on expanding the MLR principles to Rx spend is expected by April 1st and, if approved which appears likely, will go into law on Jan. 1, 2014.
Guys, this is HUGE! The next step I expect is that Rx costs will be bid out, much in the fashion by which Medicare is lowering the cost of many in-home services, oxygen and COPD apparatus and durable medical equipment including beds, wheelchairs and power chairs and scooters whose costs to Medicare have dropped by as much as 45% when bid out!
I have been saying for years that in healthcare, including the retail pharmacy space, that cash used to be king, but in the future this old adage will be supplanted by a new mantra: COST IS KING. That day of reckoning is fast approaching, IMHO.
GLTA,
Yank
If you are anywhere near Mission Valley, don't miss Baci Ristoranti, an epic Italian restaurant with incredible food and service. I'm jealous. I LOVE San Diego!
GLTA,
Yank
No, Prudent Capitalist, there were two distinct Bush tax cuts as published in The Federal Register. The Economic Growth and Tax Reconciliation Act of 2001 was passed on June 7, 2001. The Jobs and Growth Tax Relief Act of 2003 was passed on May 23, 2003. The provisions of the second Bush tax bill including HUGE changes to the original bill including elimination of phase-in periods of as much as 8 years, replaced by full. immediate impact of most all provisions. These bills, in tandem, are collectively referred to as "The Bush Tax Cuts" and an excellent resource summarizes this on Wikipedia, if you are interested.
With so much of Walgreens business dependent on Rx spending by Medicare and Medicaid, and so much of the spend of these apparently held hostage in the Sequestration debate, I am not sure why a discussion on these topics would be a violation of Terms of Service(?). I really urge you to review some of the content on the website I earlier recommended, www.cms.gov, and the extensive detail they present on government healthcare spend, cost management direction and the goals/savings/optimization included in The Affordable Care Act. If you look at the detail and what is occurring, you would NEVER say that nothing is being done to meaningfully impact entitlement spend by Obama. More needs to be done, for sure, and I fully agree on that point.
This dialog is what shapes the future of Walgreens S/P, IMHO. And I am talking about 2013 S/P, not some remore point in the future.
GLTA,
Yank
robb, the entirety of Walgreens future and its eventual share price and market capitalization are linked to outcome in spending reductions for Medicare, Medicaid and other entitlement programs. Among its domestic competitors, CVS has a partial vulnerability but is parhaps better diversified with its PBM revenue and CVS is far more vulnerable to changes in interest rates than to reimbursement pressure compared to WAG.
Many pundits offer up the argument that failure to cut entitlement spending leaves the cost as an inherited burden of Baby Boomer's children, yet the inescapable fact is that of the 55 million Medicaid recipients most recently reported, 27 million of them actually WERE our children. Huge cuts to Medicaid doom the expected life span and care quality for a generation of young Americans who have no other safety net.
The reimbursement pressure that Walgreens has almost stoically resisted for half a decade, first in state actions in Delaware, Washington and others, then its fracas with CVS and most recently in the impasse with ESRX, offer a clue into the corporate position on similar pressures, going forward. The pressures seen in our domestic pharma retail landscape are even more pronounced in most overseas markets, and notably so in those with single payor systems. Healthcare reform is, as you note, is a global issue with common, global pressures and a global economy that can ill afford all the new technology, duplication of capabilities and layer upon layer of cost pyramiding spread among so many well-compensated tiers in the provider food chain.
I think that wicked one made a great point the other day that the WAG/CVS contract is up for renewal this Spring. That is my recollection, as well, and could be the next round in the Walgreens saga. I do know that no PBM is going to pay more for an Rx to be filled in a pharmacy with higher costs because they offer the convenience of store-made sushi, a nail salon and craft beers. We will see...
GLTA,
Yank
The Bush tax cuts of 2001 and 2003 reduced revenue intake by $550 billion per year. When employment collapsed during the recssion, further tax intake was hammered and spending initiatives like TARP and bailouts, plus infrastructure spending absolutely created an enhanced deficit... more spending than revenue.
Yes, Bush had a budget. It was a budget that had no spending category for the wars in Iraq and Afghanistan. Trillions in spending were conveniently "overlooked" until Obama came to town and inherited this mess.
I am not a huge pro-Obama type and I think he bears as much responsibility for the gridlock in Washington as do McConnell and Boehner, but it is simply inaccurate to make hime the primary scapegoat for all that is wrong in America. I am actually of the revised opinion that the Sequestration may be a painful but eventually positive outcome, if it occurs, for two reasons. First, it will force cuts of some kind, any kind and THAT is at least a wake-up call on uncontrolled spending. Second, it will put political focus on "the beneficiaries" of the Sequestration cuts and the huge, likely outpouring of disdain for Congressa that will ensue and be felt on both sides of the aisle at midterm election time. All these "entitlement" spongers that are clearly the target of SSA, Medicare and Medicaid cuts vote, and vote they will.
Interesting dynamic, worth following and certainly worth vigorously discussing.
GLTA,
Yank
Prudent Capitalist, I am digging through my cyber archives for a copy of the Actuarial Analysis done by the Federal Budget Office that has the supporting math which confirms the "entitlement risk window" is about 20 years and then totally goes away as The Baby Boomer phenomenon literally dies off. It was done awhile back around the Simpson-Bowles Commission report and I am not certain I saved it.
I agree with robb that a chunk of the deficit gap can be bridged by reform of abuses and fraud. My favorite example was my now deceased mom's podiatrist that billed Medicare $600 for trimming her ingrown toenail by billing the 15 second procedure as "surgery". Medicare is now beginning the process of bidding out patient care and awarding contracts with strict performance caveats to lower cost providers. The savings to Medicare during a multi-year test program was around 45%. Many experts including Simpson-Bowles believe in "means testing" as a preferable bridge to the spending vs. tax revenue gap. Simply raising the retirement age for the elderly only forces them to work longer, exacerbating the unemployment problem instead of making way for the younger workers entering the workplace.
All just my opinion. One thing we all agree on is that SOMETHING absolutely must be done before we all go down the tubes.
GLTA,
Yank
That's your opinion.
I do not agree with it. The deficit is a bipartisan adventure that includes the unfunded costs of multiple wars that were unbudgeted for >8 years. Obama is a small part of the problem. Decades of "kicking the can down the road" by both parties is the root cause and, IMHO, will not be remediated until the PAC money/major campaign donor spending edge is eventually wiped out when enough Congressional recipients get voted out of office, once and for all. This, to me, means a clearance of both sides of the aisle at mid-term.
Blaming the constituents of "entitlements" for the bad math of the budget is a convenient pro-forma for decimating Medicare, Medicaid and VA benefits, but that "solution" ignores the statistical TRUTH that as the Baby Boomers die off, the expense for them also evaporates and the survivors find a much more level playing field. The debate is not how we bridge the statistically challenging years, but more how the extremely wealthy avoid paying anything to the generation that saved their butts by freeing America from Axis domination, using the "cost" as a sick rationale to short-shrift their parents and grandparents so they can buy a bigger yacht or imported luxury car under the popular guise of Tea Party budget reform.
GLTA,
Yank
Robb, I think a correction may well be in order, but the sequestration is NOT the government shutdown that the debt ceiling scrimmage represented. On down days like today, I am adding CQP, especially early in the day when the drops tend to be steepest. I am building a position towards 2015 and, in the meantime, harvesting the dividend of 7.3% I am building to a weighted cost position of around $100K and then plan to ride it out barring extraordinary news.
If the market corrects, I am a buyer of Costco and CLNE. I am deferring on buying Overstock.com for exactly the reasons you identify in the WMT numbers and as I fear a second tech bubble may burst and take down AMZN, GOOG and PCLN as it has already previewed with Opentable and AAPL. OSTK will get hammered in the crossfire if that bubble gets punctured.
By the way, OT to milo: I found your Bogle wine on sale at Walmart for $9.97 a bottle. We'll be trying a bottle with steaks on the grill, tonight. Thanks for the tip!
GLTA,
Yank
Barron's has really declined in relevence and quality of reseearch. I actually let my subscription lapse when they grossly misfired on a few companies I knew inside out, including one I worked for for 16 years in a very senior role.
I'll be looking for that Bogle wine to try. Thanks, milo. We have recently been enjoying an Agentine red called Pascual Toso Cabernet at around $12 at Total Wine. Both the 2009 and 2010 are great buys. We tried it initially at The Columbia restaurant in Ybor City.
GLTA,
Yank
A Green Bay area Elementary School teacher asked young Susie if she had a favorite NFL team, to which she replied: "Yes, The Chicago Bears." Irritated, the teacher inquired why, to which Susie replied: "My Dad is a Bears fan." The teacher paused, then asked Susie if she had some other, more genuine reason to choose The Bears, which Susie answered as: "Yes, my Mom is a Bears fan, too."
Now the teacher was really pissed. Trying to make her think for herself, she snapped back at Susie that if her Mom was a moron and her Dad were a moron, what did she think that would make her, to which Susie replied: "That's easy... I'd be a Cheesehead!"
By the way, what position did your wife play? LOL.
Yank
Hi wicked one, in Central and West Coast Florida I am seeing a three part Walmart strategy tied, I think, more to the size/dimension of the local marketplace than to any specific competitor like Walgreens. Every major population center has a Walmart and the General Merchandise stores have almost all been upgraded to Super Centers that are open 24 hours and feature a full grocery in house. There are a lot of old, shuttered Walmart stores that were obsoleted when the Super Centers were built.
Mid-density suburban markets a ways out from the Super Centers are getting Walmart Neihborhood Markets at around 40,000 sq. ft. with a full pharmacy but more limited general merchandise and food items. The HABA assortment is not much less than at a Super Center. I am seeing a lot of these outlets springing up near a Walgreens, though I attribute this more to Walgreens expertise in site selection and tradition of picking the best corners than a vulture-like targeting of Walgreens as a soft target.
I am also seeing a few Walmart Express stores popping up in small towns. I have not seen these in urban markets like Tampa or Orlando as satellite convenience locations, although I have read that this is part of Wally's overall strategy. They seem to be tied to small town locations and are more like a Dollar General than a Walgreens in both size and assortment. Interesting to note that they price at retail parity with the Super Centers, by market, so they in essence crush local store prices on most popular stuff.
If you open a store in Wisconsis, does that mean you will become a Cheesehead?
GLTA,
Yanj
Hi robb. have been traveling with some friends from New Hampshire who were visiting us. Lucky guys missed the two foot snowfall in New England. And had some great Gulf Coast seafood.
Glad you found some value in the analyst's conference. I got so bored that I turned it off. I did look through the transcript, afterwards.
Did you note the reprised A-B financial data for their FY12? $2.2 billion in EBITDA. That's a lot, but their debt structure was very high, leaving little for Walgreens to devour after paying the ACQ costs. As a KKR follower, have you heard any update on their current year results for Q1 to Q3? By recollection their fiscal year ends 3/31, though my memory could be faulty on the date.
So much talk about the billion dollar integration cost savings, almost reminds me of the "re-wiring" savings that were claimed but never, in my mind, substantiated or proven as hard numbers in the results. I think they are dreaming on squeezing out even more preferred costs from big pharma for global purchasing leverage. I believe that this is both unlikely and actually illegal in some single payor countries.
GLTA,
Yank
The analyst's conference was a total snooze. Not worth the cost unless viewed as a recreational junket for the entertainment of the suited elite. Not even worth discussing the content... there wasn't any.
Yaaaaaaaaaaaaawn.
Yank
This is Walgreens first step in attempting to become a true multi-national and be traded on multiple exchanges, a veritable first for the domestic retail industry. I actually think that it makes a lot of sense, not only to generate a more global ownership of shares but, also, to open up new capital markets to help finance the second tranch of the A-B acquisition, or to take the whole venture private at some point in the future.
Magnacca's "Flagship Store" concept is an anomoly that at most will eventually apply to <5% of the retail store enterprise. Can you imagine the brand degradation if there truly were 8,000 Louis Vuitton retail stores? How gauche! So his deparure is not meaningful and may actually help in the sense that it places Pessina, alone, in the European spotlight where he enjoys much credibility, already.
It would be interesting to be a fly on the wall at this conference. I would really like to know who the Walgreens Alpha Male is, especially noting that Kim Feil won't be there to broaden the question to who the Walgreens Alpha Player is. I wonder if Bloomberg or the BBC will have coverage of this event. If I find out, I'll be sure to share it.
GLTA,
Yank
You can call him "The Silver Fox" if you want, but if the police apprehend him drinking and driving under the influence, one more time, he is likely to spend his "Silver Years" either in jail or on house arrest for a very sustained period of time.
Talk about credentials...
You know I never really considered if Magnacca may have felt slighted by the Miquelon appointment. I see nothing in Wade's curriculum vitae that would make him well suited to an international role, though Joe's experience seems to be only in Canada and the U.S. so maybe that's a "push"... I'll have to ask around on that. Milo, any insights?
Merlo's comments are well grounded in both tradition and law. Despite fanfare about A-B market entry, Russian Law is especially harsh regarding chain ownership of pharmacies. There are a lot of similar pan-European limitations and requirements for pharmacist-owned apothecary-style local operations. Even Carrefour had a problem in France where they are otherwise beloved as true French enterprise which explains why so few of its supercenters remain in the Rx business.
GLTA,
Yank
robb, according to Bloomberg News, Magnacca received upwards of $3.2 M compensation at Walgreens, not exactly chump change, and only around $700K was in deferred share options. He clearly was part of Team W (for Wasson, not Walgreens) and, at surface value, had a "sure thing" since most all his background was in retail pharmacy at Loblaw/Shoppers Drug Mart in Canada, prior to joining Duane Reade.
His leaving for a red blanket like Radio Shack, signing bonus notwithstanding, seems to make little sense for him, even considering the ego-lure of becoming CEO in his new role at the top. The only thing at The Shack consistent with his background is the franchise structure which is similar (though it's called something else in Canada) to Shoppers Drug Mart. Quite an overall career stretch, IMHO.
I suspect that there is more to this story. I also suspect that ordinary folks like us will never hear the details, so we will just have to read the tealeaves in Mr. Market's cup and guess what it all means. Very interesting, though!
GLTA,
Yank