We ‘screamed too loudly about theft’

Walgreens may have blown the horn too loud over shoplifting, a company executive said in an earnings call Thursday.

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“We may have cried too loudly at theft,” says James Kehoe, CFO of Walgreens Boots Alliance, per CNBC.

In its 2022 Survey on retail safetythe National Retail Federation reported that 32.8% of retailers surveyed said organized retail crime has become “much more” a concern over the past five years.

The Walgreens executive also said it hired private security firms to manage the theft.

“The security companies have been proven to be largely ineffective,” Kehoe noted.

In his Nov earnings for the third quarter, Target said it lost $400 million by 2022 due to “a significant increase in theft and organized retail crime across our business.” Walmart also sounded the alarm about the issue last month.

Related: Walmart CEO Doug McMillon says organized shoplifting can lead to store closures

The thefts are also going viral on social media, such as when two men made off with about $35,000 worth of merchandise from an Apple Store in Palo Alto, California in November.

In October 2021, Walgreens closed five stores in San Francisco due to widespread shoplifting. according to Bloomberg.

Companies often use “shrinkage” — the gap between what stores think their inventory is versus what they have in stock — and it includes things like employees stealing or breaking products and theft from outside stakeholders, according to CNBC.

Last year, Kehoe said the shrink was about 3.5% of inventory. This year, compared to 2021, the contraction is down “in the lower 2s, now call it the mid-range of 2.5%, 2.6%,” he said.

“And we have stabilized,” he added. The company also said it likely overinvested in security guards.

“Actually, we’ve probably bet too much and we can move away from that a little bit,” he said.

Walgreens reported better-than-expected earnings, driving its stock up slightly.