A top Walgreens executive admitted Thursday that the drugstore chain exaggerated the threat of organized retail theft, a flashpoint in the bitter criminal justice debate that helped impeach former San Francisco District Attorney Chesa Boudin.
“Maybe we cried a lot last year,” Walgreens Chief Financial Officer James Kehoe said of the earnings, acknowledging that there were losses from “shrinkage” — usually a term for merchandise that disappears from store shelves because someone stole it. more manageable.
While inventory that accounted for 3.5% of the drugstore chain’s total sales last year disappeared, this year’s losses have stabilized, Kehoe said, closer to the “average two.” He further noted that Walgreens has stepped up private security patrols at its stores, which have been “largely ineffective.”
Instead, the company will rely more on law enforcement. CNBC first reported Kehoe’s comments.
Data released by the San Francisco Police Department in October 2021 did not support Walgreens’ claim that rampant theft had forced it to close five stores. On average, the unfortunate stores recorded two shoplifting incidents per month from 2018 to their closing dates in 2021.
The retail theft — particularly at Walgreens and other similar stores — has fueled fear and anger at a time when San Francisco has backed away from progressive reforms put in place by Boudin, who promised to crack down on mass arrests and crack down on police officers.
Viral videos of pharmacy capers have gone viral on social media, including one of a man stuffing items into a garbage bag at a Hayes Valley Walgreens that closed in 2021. city leaders were suspicious Officials have also faced increasing pressure to crack down on petty crime because of Walgreens’ messaging and the perception of increased lawlessness in downtown San Francisco.
Last month, San Francisco police officers quietly searched stores, including drugstores and clothing stores, to stop and arrest shoplifting suspects.
A Walgreens spokeswoman declined to comment on Kehoe’s statements Thursday.
Some retail industry observers who spoke to The Chronicle on Thursday expressed confusion and skepticism about the decline in theft at Walgreens, at a time when representatives from other stores are pleading with city officials for more police officers. At least one expert saw the numbers as a possible sign of success for Walgreens.
Tony Sheppard, CEO of loss-prevention software company ThinkLP, said in conversations with hundreds of retail customers he found widespread looting “still a very concerning issue”. He grew more optimistic with the recent passage of the federal INFORM Act, which requires e-commerce marketplaces to verify high-volume sellers.
Professor Kirthi Kalyanam, executive director of Santa Clara University’s Institute of Retail Management, saw two possible interpretations of Kehoe’s remarks: Either the company overestimated the amount of shrinkage it would see last year, or it correctly predicted its losses — but it did. stop them with smart security measures. If the latter is true, other San Francisco businesses might consider replicating Walgreens’ methods, Kalyanam said.
Still, San Francisco Comptroller Ahsha Safaí, who has made retail theft a political priority, said she can see why the Walgreens executive downplayed the theft’s impact on the earnings call.
“This is a national audience of investors, and they’re trying to instill confidence that their stores are safe and secure,” Safai said, adding that Kehoe’s rhetoric on Thursday contrasted sharply with the “reality on the ground.”
He cited a letter from Safeway representatives to the London Mayor and Board of Supervisors at the start of the holiday shopping season, calling for swift action against the shoplifting and flash mob-style thefts that have plagued the business. In October, a security guard at a Safeway store in Excelsior was shot and wounded while confronting an alleged shoplifter.
Such events shook Safai, whose district includes the Excelsior district. Despite Kehoe’s positive predictions, San Francisco merchants are lining up to hire off-duty police, the superintendent said: “What we’re seeing on the ground is something we have to go ahead and monitor.”
Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan