A major US drugstore chain that supposedly experienced a surge in shoplifting last year – fanning the flames of conservative outrage over a purported spike in crime and disorder – said on Thursday that it might have overstated the problem.
Walgreens’ chief financial officer, James Kehoe, said during an earnings call that “shrinkage” – the difference between a balance-sheet inventory and actual stock – had returned to lower levels after a brief rise. Retail shrinkage is largely due to theft, though some is also due to accidental damage or loss.
“Maybe we cried too much last year when we were hitting numbers that were 3.5% of sales,” Kehoe said, according to an earnings call transcript. “We’re down in the lower twos, call it, the mid-2.5, 2.6 kind of range now.”
Walgreens added fuel to the fire last year when it said it was closing several of its San Francisco stores due to “retail theft” that could not be stopped despite security investments. The company hired private security at some stores and at least one outlet put ice cream under lock and key.
Those approaches were excessive, Kehoe admitted on Thursday.
“We’ve put in incremental security in the stores in the first quarter, actually, probably we put in too much, and we might step back a little bit from that,” he said.
The chain, part of the Walgreens Boots alliance, would shift more toward relying on law enforcement rather than private security companies, as “the security companies are proven to be largely ineffective”, Kehoe said.
Other retailers have recently stuck by their contention that theft of some kinds is up. Walmart claimed it was struggling with an increase in shoplifting, and warned of consequences such as increased costs and potential store closures.
“Theft is an issue. It’s higher than what it has historically been,” the company chief executive, Doug McMillon, told CNBC. However, McMillon said that this has largely stemmed from “organized retail theft” rather than one-off shoplifting.
While shoplifting might not have hurt Walgreens’ bottom line as much as it once thought, the company said it suffered a $3.7bn loss in its first quarter, partly relating to litigation over the US opioid epidemic, which has killed hundreds of thousands of Americans in the last decade. Walgreens reached an opioid-related settlement with state and local governments last quarter to pay $5.7bn over 15 years.