Rein out as Walgreens CEO

DEERFIELD, Ill. In a surprise announcement that sent shock waves through the tightly knit community of big-chain retail executives, Walgreens announced Oct. 10 the immediate retirement of Jeff Rein as chairman and chief executive officer.

Rein, a 26-year Walgreens veteran who built a reputation for quiet-spoken but determined leadership, effective people skills and competitive drive, expressed “great confidence in the company’s future.” But his abrupt departure comes in the wake of Walgreens’ unsuccessful bid for Longs Drug Stores and in the midst of an alarming drop in consumer confidence amid Wall Street’s financial meltdown. 

Rein, 56, also gave up his seat on Walgreens’ board of directors, cutting all official ties with the nation’s largest drug chain. The company named 62-year-old Alan McNally, the board’s lead director, to serve as acting chairman and chief executive officer, and to help lead a nationwide search for Rein’s successor.

Undertaking that search will be a special committee of three board members. In addition to McNally, that committee includes William Foote, chair of the governance committee, and James Skinner, chair of the compensation committee. 

“We would like to thank Jeff Rein for his many outstanding contributions to Walgreens over the past 26 years and respect his decision to retire,” said McNally. “Walgreens is a strong company with market-leading businesses and exceptional growth prospects. We are confident that our core retail and pharmacy business and growing health and wellness initiatives will drive continued growth and value creation for shareholders.” 

Rein, in a departing statement, thanked Walgreens’ 226,000 employees “for their exceptional dedication and commitment. 

“It has been a tremendous honor to serve,” he said. “Walgreens is one of America’s finest corporations, and I am proud of our accomplishments over the years in building America’s largest drugstore chain offering consumer goods and services and serving the health and wellness needs of millions of Americans.” 

Rein, a pharmacist and accountant, joined Walgreens as an assistant manager in 1982 and distinguished himself in store, district and divisional management before moving into top posts in marketing and finance. He succeeded David Bernauer as hief executive officer in July, 2006, maintaining the company’s aggressive internal expansion pace and its drive to shed operating costs and maintain steady gains in profitability, a Walgreens hallmark for more than three decades. 

With the economy in a downward spiral, pharmacy margins shrinking and rivals Wal-Mart and CVS fiercely attacking Walgreens’ market share throughout the U.S., however, the company has found it increasingly difficult to maintain its 34-year unbroken streak of record sales and earnings. In addition, Rein’s retirement came just two days after Walgreens announced in a tersely worded letter to Longs chairman and chief executive officer Warrant Bryant that it was withdrawing its offer for the West Coast chain. 

However, Walgreens spokesman Michael Polzin insisted Rein’s departure “has nothing to do with the Longs proposal.” In addition, he told Drug Store News, the outgoing chief executive officer’s abrupt retirement is “not a health-related issue, nor an ethical issue in any way.” 

Polzin also said the position of Greg Wasson, president and chief operating officer, is not affected by the Rein announcement. Beyond that, he said, Walgreens is not commenting. 

Presumably, Wasson is on the list of possible successors being considered by the board’s search committee, which Polzin said is considering candidates “both inside and outside the company.”