Walgreens might have blown the horn too loud over retail theft, a company executive said in an earnings call on Thursday.
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“We might have cried too hard on theft,” said James Kehoe, CFO of Walgreens Boots Alliance, per CNBC.
In its 2022 Retail Security Survey, the National Retail Federation reported that 32.8% of its surveyed retailers said organized retail crime has become “much more” of a concern in the past five years.
The Walgreens executive also said it has hired private security companies to manage the theft.
“The security companies are proven to be largely ineffective,” Kehoe noted.
In its November earnings call for the third quarter, Target said it had lost $400 million in 2022 due to “a significant increase in theft and organized retail crime across our business.” Walmart also raised the alarm over the issue last month.
Related: Walmart CEO Doug McMillon Says Organized Retail Theft Could Lead to Stores Closing
The thefts are also going viral on social media, such as when two men made off with about $35,000 in merchandise from an Apple store in Palo Alto, California in November.
In October 2021, Walgreens closed five stores in San Francisco, over what it said was widespread shoplifting, per Bloomberg.
Companies often use “shrinkage” — the gap between what stores think their inventories are versus what they have in stock — and it includes things like employees stealing or breaking products and theft from external stakeholders, per CNBC.
Last year, Kehoe said shrinkage was clocking in at about 3.5% of inventory. This year, compared to 2021, shrinkage has come “down in the lower 2s, call it, the mid 2.5%, 2.6% kind of range now,” he said.
“And we’re stabilized,” he added. The company also said it probably invested too much in security guards.
“Actually, probably we put in too much and we might step back a little bit from that,” he said.
Walgreens reported better-than-expected earnings, sending its stock up slightly.