Walgreens Could Use a Prescription for Ailing Drugstore Business

When billionaire Stefano Pessina took over as chief executive officer of Walgreens Boots Alliance Inc. in 2015, he soon began hunting for his next big deal. By October of that year, he’d found it: a $9.4 billion plan to buy Rite Aid Corp. that would have vaulted Walgreens past CVS Health Corp. to become by far the largest U.S. drugstore chain. But after he spent almost two years wooing government officials and investors, regulators prevented Walgreens from swallowing Rite Aid. In September 2017, Pessina had to settle for buying 1,932 Rite Aid stores, less than half as many as his original target.

As it turns out, that might have spared Walgreens an even more painful reckoning than the one it now faces. On April 2 shares of the company plummeted 13 percent after it said earnings would be stagnant for the rest of its fiscal year, which ends on Aug. 31. Pessina, who owns 15.9 percent of Walgreens shares, lost $1.2 billion of his personal wealth in one day; the stock’s total decline since his Britain-centered Alliance Boots drugstore chain merged with the U.S.-based chain has reached 28 percent.