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Walgreens Boots Alliance has signed a deal with Fareva, a large contract manufacturer of cosmetics, pharmaceuticals and household products to make its “beauty brands and private label products.”
The Rite Aid that will emerge from the WBA deal will be much different than the company that existed before the deal. Walgreens was going to buy RAD for $9.4 billion, or about $9 per share. The Federal Trade Commission (FTC) didn’t like that idea, so it told Walgreens and Rite Aid to go back to the drawing board.
Consider that in January, Rite Aid was valued at more than $8.5 billion, versus a valuation of around $2.4 billion today. Investors should ask themselves this: Other than market expectations and Walgreens’ decision to end its merger attempt, what has drastically changed for the worse in six months? Plus, with Walgreens instead deciding to buy roughly half of Rite Aid’s stores, from which the latter can use proceeds to pay down debt, Rite Aid’s fundamental metrics can drastically improve.
Ever since Rite Aid Corp.'s (RAD) merger deal with Walgreens Boots Alliance Inc. (WBA) fell through on Jun 29, the stock has turned in to a forbidden fruit for investors.
The success of platform companies like Airbnb, Amazon, and Netflix has led to envy bordering on despair for their competitors. When we asked one successful online retailer “How do you compete with Amazon?” the response was “You don’t.” Publicly, CEOs talk about digital transformation, but privately, they wonder if their efforts will be enough. Companies are right to be worried. Our research shows that companies with platform- and network-based business models are exponentially better at creating value. They grow faster, make more money, and are more valued than companies organized around products and services. Building a successful platform business is hard enough when you have an original idea, ample capital, no core business to cannibalize, and a team of top talent. (Just ask the executives at Uber, Twitter, Fitbit, and Snapchat.) So what’s a legacy company to do? You might think that you have to turn yourself into a Silicon Valley startup and reinvent your business model. The good news is that you can harness the power of platforms and network effects without turning yourself completely inside out. The business press tends to focus on “pure-play” platforms like Facebook, eBay, and PayPal. But platforms and networks can be developed in many different ways. Insight Center Crossing the Digital Divide Sponsored by DXC Technology How the best companies get up to speed. Think of platforms and networks in our digital age as the equivalent of electricity and motors in the industrial age. Some companies were in the pure-play electricity and motor business, like General Electric and General Motors. But most successful companies used electricity and motors to reinvent their existing businesses, whether in manufacturing, transportation, or construction. It would have been foolhardy for a manufacturer in the 1930s to create a separate division to pursue an “electrical business.” And yet it is the mistake many companies have already made by separating their “digital business,” and they are susceptible to making it again with platforms and networks. The reason companies make this mistake is because they confuse thinking and doing. Platforms and networks are a mental model as much as a business model. The traditional way of thinking about value creation is linear and incremental. A production process turns inputs into outputs and distributes them through a tightly controlled supply chain. Value is in the products and services themselves. The new way of thinking about value creation is networked and exponential. A platform connects providers and users in a multisided market. The value is not in the items being produced one at a time but in the connections being made many-at-once. In the language of networks, the value of the platform provider is not in creating the nodes (whether people, things, or data) but in fostering the connections between the nodes. As an example, hotel chains like Marriott or Hilton create value chains that deliver rooms and related services to their customers. In contrast, Airbnb creates a network that connects hosts and guests. Retailers like Walmart and Macy’s manage a supply chain, buying and reselling their own inventory. By contrast, Alibaba and Amazon create connections between buyers and sellers. Note that people often get hung up on definitions of “platform” these days. A platform can be a business platform (a multisided market), a software platform (a cloud-based subscription service), or an engagement platform, (a user-generated community). What defines a platform is the ability to generate a network effect. Einstein’s famous formula of E=MC2 can be adapted for our purposes. Think of E as Enterprise Value. M is Mass, in this case all the things, people, and assets of your ecosystem. C2 is the exponential effect of Connectivity and Co-creation. In a traditional business, there is little connectivity or co-creation, so the enterprise value is equal to the “mass” of the company — its human resources, financial assets, intellectual property, and physical goods. By adding connections and co-creation, we multiply the ability of these assets to create value. To put this new way of thinking into practice, we have found it helpful to think about networking different types of capital. In our E=MC2 equation, you start with your M and then add the C2 to generate more E. Every organization has five types of capital: human, financial, intellectual, physical, and relational. Let’s see what happens when we connect them rather than manage them — that is, focus on the links rather than the nodes. Human capital. We normally think of people as something to be managed. After all, we call the department human resources. Organizations create value by managing people (inputs) to generate products and services (outputs). But consider the organization itself as a platform, connecting people who have ideas, skills, and work with the people who need them. Companies like GE are using crowdsourcing platforms that engage people from inside and outside the company. Others, like Morning Star and Zappos, are taking a more networked approach to the way the company is managed and governed. Where traditional companies try to increase productivity by focusing on M, these companies work on increasing connectivity (C2). Intellectual capital. For most companies intellectual property is something that sits on their balance sheet. Patents, trademarks, brands, data, and software (IP) are proprietary assets creating differentiation. But what if the value is not in the intellectual capital itself but in the connectivity of that IP? For example, open APIs are protocols for data exchange that enable the sharing of software and data among customers, suppliers, and partners. Software connectivity and data exchange are at the heart of platform companies like Salesforce and Google. But traditional brands like Best Buy, Citi, Walgreens and Kaiser Permanente are also opening up access to create data-driven ecosystems. They recognize that the way to create value (E) is by creating not scarcity and exclusivity (M) but connectivity and utility (C2). Physical capital. We normally think of the value of an asset as originating in what someone will pay for it and how they will use it. But in a digital world, physical goods become sentient and social. They are able to generate value in how they work together. Consider how Nest is networking its thermostats, smoke alarms, and cameras to create home security solutions, or how Caterpillar and GE are each networking their equipment and engines to save millions in maintenance costs. The internet of things is not just about making products smarter; it’s about connecting them to each other. Every company should be thinking about how its products and assets could become a Social Network of Things. Financial capital. You might think that money is money. But we are moving toward more-networked forms of currency. Some of these are digital currencies like bitcoin, which is built on distributed models of verification and payment through the blockchain. Some are branded currencies, like the points in a loyalty program or the cash in an iTunes account or Starbucks mobile app. Even funding sources can be networked, as in the case of Kickstarter and other crowdfunding models. Money itself is becoming more intelligent and connected. Relational capital. To achieve loyalty, most companies focus on managing their customer relationships. After all, there is a multibillion-dollar industry focused on customer relationship management. But a networking mindset goes beyond the relationships you have with your customers and looks for opportunities to connect them with each other. This could be directly, as Sephora does with its online communities using beauty tips as currencies. Or it could be indirectly, as Opower does in giving people benchmarking data on energy usage to foster conservation and efficiency. The value of your customers is more than what they do for you (E=M) — it’s what they do for each other (E=MC2). Different companies can pursue quite different platform strategies based on what kinds of capital they choose to network together. Consider the different paths of Waze and Google Maps as mobile apps. Both have the feature of displaying traffic congestion. But one does so by networking physical and intellectual capital, and the other does it by networking human and relational capital. Google Maps uses anonymized data from the GPS of drivers’ mobile devices, relying on APIs and algorithms to generate traffic conditions in real time. Waze, on the other hand, uses members of the Waze community to report road conditions, relying on reciprocity and appreciation as a social currency. There are five steps to incorporating these network effects into your business (which we call PIVOT): Purpose: Define the shared objective that everyone in your community or ecosystem will contribute to and benefit from. For Google Maps and Waze, this is saving time and getting where you want to go, or as Waze says, “Outsmarting traffic together.” Inventory: Identify the potential types of capital that might be networked together. Google Maps went in the direction of networking people’s phones, whereas Waze chose to network the people themselves. Validate: Test the ability to create value for the network through iteration and co-creation. The director of growth for Waze has described how the company went through many experiments to find the right engagement model. Operate: Deploy the platform to foster connections and the exchange of value at scale. This might involve building your own platform, or acquiring or becoming part of someone else’s. Both ZipDash, the creator of GPS traffic reporting, and Waze ended up joining Google to achieve more scale. Track: Create new KPIs to measure the success and growth of the network. Most KPIs are focused on E and M. You want KPIs that measure the network effect, or C2. In the beginning, Waze didn’t care about how many people signed up. It wanted to know how intensely people were using the service. Since it was networking human and relational capital, its KPIs were about participation and engagement. By contrast, ZipDash was networking devices, so its KPIs were focused on data-oriented measures like latency and coverage. Everyone on the leadership team has a role to play in making this pivot. The CHRO can be working on networking employees and locations; the CMO on networking customers and partners; the CFO on networking funding and payments; the CIO on software and data; and the COO on products and services. The job of the CEO should be changing the KPIs and shifting the capital allocations to reinforce a culture of collaboration and realign the business for exponential growth. As you embark on your network journey, keep in mind that the place to start is with your mental model. Value in a network is about what you connect, not what you make. Change how you think, and you will naturally change what you do. Then change what you measure to align incentives and track your progress.
As Wal-Mart ramps up its war against Amazon.com, it seems the retailer’s suppliers are increasingly being squeezed. After telling trucking companies that the retailer will no longer do business with them if they continue moving goods for Amazon, Wal Mart is now threatening to punish suppliers for delivering goods a day early. Here’s Bloomberg: Long known for squeezing its vast network of suppliers, Wal-Mart Stores Inc. is about to step up the pressure. The focus this time is delivery scheduling, and the company’s not messing around. Two days late? That’ll earn you a fine. One day early? That’s a fine, too. Right on-time but goods aren’t packed properly? You guessed it -- fined. The program, labeled “On-Time, In-Full,’’ aims to add $1 billion to revenue by improving product availability at stores, according to slides from a presentation obtained by Bloomberg, and it underscores the urgency Wal-Mart feels as it raises wages, cuts prices and confronts a powerhouse rival in Amazon.com Inc. that’s poised to grow with its planned purchase of Whole Foods Markets Inc. “Wal-Mart has to find efficiencies wherever it can,’’ says Laura Kennedy, an analyst at Kantar Retail. “They’re trying to squeeze and squeeze and squeeze.’’ The initiative builds on progress Wal-Mart has made in reducing inventory and tidying its 4,700 U.S. stores after the company’s backrooms routinely became so overcluttered that stores had to purchase excess storage capacity. According to Bloomberg, Wal-Mart isn’t the first big retailer to tighten the deadline for vendor deliveries. Target Corp. implemented a similar policy last year as part of a broader supply-chain overhaul. But Wal-Mart’s vast logistics network of more than 150 U.S. distribution centers dwarfs that of any other retailer, and the company typically accounts for a sizable chunk of its suppliers’ sales: 27 percent for bleach maker Clorox Co., for instance. “The new rules begin in August, and the company said they will require full-truckload suppliers of fast-turning items - groceries, paper towels - to “deliver what we ordered 100 percent in full, on the must-arrive-by date 75 percent of the time.” Items that are late or missing during a one-month period will incur a fine of 3 percent of their value. Early shipments get dinged, too, because they create overstocks. By February, Wal-Mart wants these deliveries to be on-time and in-full (known as “OTIF”) 95 percent of the time. Its previous target was 90 percent hitting a more lenient four-day window.” “Variability is the No. 1 killer of the supply chain,’’ Kendall Trainor, a Wal-Mart senior director of operations support and supplier collaboration, said in a presentation to vendors earlier this year. For many of Wal-Mart’s suppliers, this would represent a major shift: OTIF scores for Wal-Mart’s top 75 suppliers - including Procter & Gamble Co. and Unilever - had been as low as 10 percent, according to Trainor’s presentation. And not one had reached the 95 percent long-term target. As a slide at one company presentation warned: “The goals are aggressive and will require new ways of working.” The suppliers have largely refrained from commenting, according to Bloomberg: Unilever declined to comment. Damon Jones, a spokesman for P&G, said his company and Wal-Mart “share a joint commitment to superior consumer service - including on-shelf availability.” A Wal-Mart spokesman said the retailer is “working closely with our vendors to help reach these targets. We know that when products we’ve ordered arrive on time, it results in happier customers.’’ Under previous Chief Executive Officer Mike Duke, stores suffered from a lack of manpower to keep shelves stocked, and missing products drove customers to rivals including Dollar General Corp., Walgreens Boots Alliance Inc. and German discounter Aldi. When Doug McMillon became CEO in 2014, one of his goals was to improve what the company calls “on-shelf availability.” It has gotten better, although Wal-Mart declined to provide specific figures. While big suppliers should be able to invest in fancy inventory-management systems to get up to speed with the new rules, smaller businesses may not be able to comply with Wal-Mart’s demands. Some don’t even know what “OTIF’’ stands for, according to Colby Beland, vice president of sales at CaseStack, a logistics provider that bundles supplier shipments for delivery to retailers’ warehouses. The new rules have created brisk business for consultants, who are busy crisscrossing the country delivering tutorials on the program. “OTIF is the hottest subject out there right now,’’ according to 8th and Walton, a consultant based in Wal-Mart’s hometown of Bentonville, Arkansas, that has conducted OTIF seminars in New York; Portland; Ontario, Canada, and other cities. “Everybody has come to the stark realization that OTIF is here and it’s real and they better get ready for August,’’ Beland says. Many of these consultants are playing down the negative aspects of the shift and are instead comparing it to when Wal-Mart adopted bar codes in the early eighties. “The program is the latest chapter in Wal-Mart’s history of badgering suppliers to improve efficiency and performance. It was the first big retailer to embrace bar codes in the early 1980s to track inventory and sales, mandating precise locations on packages for easy scanning. Vendors that refused were kicked off the shelves. ‘Suppliers went crazy at first, but they all figured out how to implement it and it helped them as much as it helped Wal-Mart,’ says Dale Rogers, a logistics professor at Arizona State University. ‘This is just the next one of these things.’” In what might seem like a stroke of benevolence, Wal-Mart said it will only fine companies when they, not Wal-Mart, are responsible for the delay or early arrival. The retailer has developed a scoring system that breaks down reasons for non-compliant deliveries and will fine suppliers only if they’re responsible. But here’s the catch: If suppliers don’t agree with the fine, too bad: Disputes “will not be tolerated,’’ Wal-Mart says. Even a freak snowstorm, like the one that paralyzed travel in the southeastern US in 2015, might not get suppliers off the hook. As one b-school professor points out, the system likely won’t be great for fostering mutual trust between the retailer and its suppliers. “You end up in a situation of, ‘Who is to blame?’ ” says Santiago Gallino, an associate professor at Dartmouth College’s Tuck School of Business. “It’s a tough discussion.”
Laboratory Corporation of America Holdings (LH), also referred to as LabCorp, has decided to extend its Technical Services Agreement with Novant Health which was originated in 2012.
Since the Walgreens Boots Alliance Inc (NASDAQ:WBA) merger fell through, Rite Aid Corporation (NYSE:RAD) has given up the ghost. Instead, to avoid regulatory hurdles, Walgreens opted to buy about half of Rite Aid’s total locations, including three distribution centers.
Leerink said in a note on Thursday it remains incrementally more cautious on the shares of Walgreens Boots Alliance Inc (NASDAQ: WBA ) following the release of its quarterly results and after analyzing ...
Perhaps you’re familiar with the Walgreens tagline: At the corner of happy and healthy. Even though the slogan is somewhat new, it is what Walgreens has always delivered.
Fred's, (FRED), which has been struggling to recover from the blow of a failed merger between Rite Aid Corporation (RAD) and Walgreens Boots Alliance (WBA), recently announced soft June comparable store sales.
Over the last few months, pharmacy chain Rite Aid Corporation (NYSE:RAD) has been on a rollercoaster ride as investors questioned whether a merger with Walgreens Boots Alliance Inc (NYSE:WBA) would go through. Last week, the ordeal finally came to an end after two years of back-and-forth between the two companies and the Federal Trade Commission.
The new agreement would enable Walgreens Boots Alliance (WBA) to buy nearly half of the Rite Aid business at a deal value, almost one-third of the original price.
Walgreens and Rite Aid have entered into a new agreement under which Walgreens will acquire around half (2,186) of RiteAid’s stores, inventories and certain distribution assets for $5.175 billion in cash, subject to regulatory approval.
Полиция американского города Дирборн, штат Мичиган, разыскивает лысого вора, который украл из местной аптеки Walgreens семь коробок средства, предназначенного для наращивания волос. Нарушитель был одет в футболку с надписью "Air Force Dad" ("Папа-десантник").