Financial Analysis of Walgreens vs. Cvs Essay

CVS has a slightly lower value for days to sell, meaning they have a quicker turnover in their inventory than Walgreens. They will then be able to sell more inventory which means that they will convert more assets to cash. A company doesn’t want all of its assets sitting in inventory because it is not liquid at that point. CVS had a higher value for days to collect. This means that it will take them longer to receive their money from sales. This could cause problems because a company reports the increase to sales revenue but does not report an increase to cash until it is received. They must also plan accordingly for when they need to do their purchases because they may not have received their cash from the customer

A snapshot of the Net Margins for Wal-Mart Stores Inc. is shown below: Net Margin Wal-Mart 2010 3.90% 2011 3.50% 2012 3.60%

Placed within an industry being pressured by reimbursement rates, plagued by market saturation, and in constant fear of government legislation, Walgreens is trying to pursue new avenues to promote company growth. In order to promote market share growth in New York, Walgreens acquired the drugstore chain Duane Reade in 2010 (WAG to Acquire NY Institution Duane Reade, 2010). Walgreens also recently expanded their online presence in May of 2011 with the acquisition of drugstore.com (Walgreens Co.). While Walgreens also focuses on traditional organic store growth, these actions exemplify their large focus on promoting company growth through new avenues.

Walgreens offers a variety of products and services. Based on the economic times, price increases due to increase in wages,

Walgreens has attempted to build satisfaction, value, and loyalty for their customers by remembering that loyal customers are at the heart of their business, and thus rely on a customer-on-top business model. To do this, Walgreens has learned the talent of listening and responding to their customers in the following ways: (1) to respond to the busy lives of their customers, Walgreens allowed them to fill prescriptions at different stores and offered them the drive-thru pharmacy; (2) customers who spoke other languages complained about the labels, and Walgreens responded by printing labels in more than 10 different languages; and (3) when customers with eyesight problems could not read the labels, Walgreens offered printed labels with larger font sizes so that customers could more easily read the bigger text (Berenbaum, n.d., para. 19).

Walgreens was founded in 1901 measuring 50 feet by 20 feet by Charles R. Walgreen, Sr.. Mr. Walgreen was born near Galesburg, Illinois and his family later relocated to Dixon, Illinois at town about 60 miles north of his birthplace. Mr. Walgreens’ father was a farmer who turned into a businessperson and saw a great potential of the Rock River Valley (Walgreen, n.d., p.1). At age 16, Charles Walgreen had his first experience working in a drug store. He didn’t always have pleasurable experiences but it was a job with pay. He had an accident at a shoe factory that cut off his left middle finger from the top joint. This injury also stops him from playing any sports at school. After a year and a half with the

At present Walgreens appears to be operating in a Horizontal Integration strategy demonstrated through its merger with Boots Alliance and a reported inquiry to purchase Rite-Aid. (Nichols, 2015) Market Penetration is another strategy which Walgreens is presently operating within. Their change in strategy to focus on the customer and improve customer service and relationships is one strategy that is being used to penetrate a market with vast competition that needs a differentiator to remain on top.

Walgreens is also mainly funded by store sales so the company sees long-term potential for about 13,000 U.S. stores. Additionally, the company long-term-expansion strategies are entering new markets, and improving customer service, investing heavily in technology enhancements that improve pharmacy efficiency and reduce costs.

Both Walgreens and CVS are showing generally favorable news on their financial statements the past two fiscal years. Walgreens increase in sales and net income though not as accelerated as CVS is quite steady. Walgreens net sales have gone up nearly 13% while net income has increased about 16%. For CVS the increase has been more dramatic, net sales are up 20% between 2004 and 2005 while net income has gone up 33% during this time period.

Walgreens on the other hand only focuses on one inventory method. Walgreens uses the Last- In, First-Out (LIFO) method for the entire business. In the LIFO method items bought last are sold first, which also means that the items still in stock are the oldest ones. Walgreens focuses in the method because it limits lower of cost or market approach, but not better than weighted average cost. Basically they

The competitive prices, countless discount opportunities, and friendly employees keep customers loyal to Walgreens even if they are not making frequent visits to the pharmacy department. This paper seeks to analyze the different components of the drug store industry and the aspects of the marketing strategy of the Walgreens Company that have kept it a strong competitor for so many years.

CVS Pharmacy is the retail division of CVS Caremark. It is also one of the largest Pharmacy Retail Chains in the country and operates more than 7,400 stores domestically. Although the retail pharmaceutical division of this corporation accounts for a significant amount of this company’s success, CVS Caremark focuses more on its corporate strategy to compete with other industry rivals such as Walgreens and Rite Aid. Considering CVS Caremark is the result of the 2007 merger of CVS and Caremark Rx, this analysis will begin with a brief history and the merger of these corporations, its current performance, strategic posture, and the strategic managers of this organization.

The company is planning to sell its in-store pharmacies to CVS Health Corporation thereby converting it pharmacies to the CVS brand. This transition was triggered by the acquisition of the Target pharmacies in December. According to the company, the CVS pharmacy will introduce new customers to its leading pharmacy care and at the same time introduce its consumers to various digital tools that will enable them to embrace healthy lifestyles. The company is also planning on embracing digital in all its endeavors.

This preliminary strategic assessment of Walgreens will describe the company’s current corporate strategy and business model. Walgreens’ acquisitions and mergers will be examined as well as the company’s globalization and competitive frame. A brief overview of how the company is performing and its cost-based business strategy will also be examined. This is the first of four reports that make up the strategic assessment for Walgreens.

The organization that I have chosen for the purpose of this corporate finance analysis is Wal-Mart. As is well known, Wal-Mart is the global market leader of