Walgreens Boots Alliance Inc. said Stefano Pessina will step down as chief executive, kicking off a search for a new leader at the company as the coronavirus pandemic has dented profits and complicated a turnaround. Mr. Pessina, a 79-year-old Italian billionaire and one of the drugstore chain’s largest single shareholders, took over five years ago following the merger of Walgreens and European pharmacy chain Alliance Boots.

Walgreens, the largest U.S. drugstore chain by stores, said Monday that Mr. Pessina will remain CEO during the search for his replacement. He will become executive chairman upon stepping down, replacing James Skinner, who will remain on the board.

“I want to thank our team members around the world for their extensive achievements in the last five years, as we have fulfilled our purpose to help people lead healthier and happier lives,” said Pessina. “I look forward to continuing to serve the company as executive chairman, and to helping to ensure the success of the new chief executive officer in every way possible.”

The pandemic has put further pressure on drugstores, as patients put off visiting doctors and other health providers, which has cut into prescription sales. Lockdowns have also reduced stores visits and retail sales. Walgreens this month said it was cutting about 4,000 jobs in the U.K. and suspending stock buybacks as demand fell off in its international business. For its quarter ended May 31, the company said the Covid-19 pandemic sliced off $700 million to $750 million worth of sales with most of the effects tied to its global retail-pharmacy business. 

The stock, in fact, has fallen 58.4% since Pessina was appointed CEO in July of 2015, compared to a 49.6% gain for the Dow Jones Industrial Average over the same time frame. Earlier this month, Walgreens Boots posted weaker-than-expected third quarter earnings and suspended its share buyback program, as stay-at-home orders in key markets around the world hit the retailer’s top and bottom line.

Todd Horwitz Chief Strategist BubbaTrading.com
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