Walgreens Stresses Private Brand’s “Tremendous Upside”

Yesterday, Walgreen’s reported Q2 2011 results in their earnings call the call included Kermit Crawford – President of Pharmacy Services, Wade Miquelon – Chief Financial Officer and Executive Vice President, Mark Wagner – President of Community Management, Rick Hans – Divisional Vice President of Investor Relations & Finance and Assistant Treasurer and Gregory Wasson – Chief Executive Officer, President and Director. In the call Walgreen’s reported record sales of $18.5 billion for the quarter, up 8.9% from nearly $17 billion in the second quarter of last year. Running comparable store sales increased 4.3% in the quarter.

Most notable was a focus on Private Brand with several mentions including this in the question and answer section of the call. With the Chief Financial Officer Wade Miquelon teasing us with the promise of Private Brand portfolio management and redesigned or new brands:

“…the big story for us is to continue to enhance our capabilities, continue to fill out what I call our architecture in terms of the various tiers and what the brand nomenclature…”

It promises to be an exciting year for Private Brands at Walgreens,

Here is an excerpt from that section of the call.

And next, we’ll move on to Patricia Baker with Scotia Capital.

Patricia Baker – Scotia Capital Inc.
Two very quick questions. First of all, Wade, both you and Greg referenced the real importance of driving private label. Can you tell us what sort of progress you’ve made in the second quarter over second quarter last year on a 12-month rolling basis? Have you seen an improvement in penetration?

Wade Miquelon – Chief Financial Officer
Well, I don’t know if we can give the exact statistics. As you know, our private label tends to be about 20%. We continue to increase that over time, I guess the key thing I would say is we continue to strengthen the team. We’ve got a very strong private label team. Duane Reade had, not only a strong team, but they are also had great tiered offerings, differentiated offerings in some categories like foods, for example, where we were not strong as them. So I think, really, what I would say is the big story for us is to continue to enhance our capabilities, continue to fill out what I call our architecture in terms of the various tiers and what the brand nomenclature is going to be like across the store, and we just see that we have really tremendous upside here.

Gregory Wasson – Chief Executive Officer
Yes, Patricia, I’d add, I feel good with not only the team and the talent we put together, as Wade said, but also where we stand at this point in time. We’ve got two opportunities here. One, we’ve got a very strong private brand already, in over-the-counter cough and cold, that type of product, that we have the opportunity just to make it even better and drive that even greater. We also have the under penetration I’ve talked about before in consumer consumables, which is where I think, obviously, the Duane Reade expertise, deal coming out of Loblaw’s and the food business can help our existing team there tremendously. So we feel we got good upside there.

Patricia Baker – Scotia Capital Inc.
Okay, and presumably, if you improve the architecture, et cetera, we should be able to see better profitability but over time, the penetration should grow even…

Wade Miquelon
Couple of things, number one, as you know, it’s more profitable than base and number two, if executed well, it’s really differentiated [ph] just for other retailers too.

Source: Seeking Alpha

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.