Walgreens backpedals on theft concerns

Walgreens may have overblown concerns about retail theft at its stores, an executive said on a recent earnings call.

What's happening: "Maybe we cried too much last year," the pharmacy chain's chief financial officer, James Kehoe, said on last Thursday's call with investors.

• Kehoe noted the shrink rate — inventory lost due to theft, fraud or damage — decreased from over 3% a year ago to about 2.5% in the second half of 2022, Insider reports.

Flashback: In October 2021, Walgreens announced it was closing five San Francisco stores due to "organized retail crime" in the city.

• The following month, San Francisco Police Department data showed the five stores set to close had fewer than an average of two reported shoplifting incidents a month since 2018.
• Yes, but: Not all crimes are reported to authorities, especially if they are minor.

Why it matters: The Walgreens announcement was a key rallying point for San Franciscans who successfully pushed for the recall of then-District Attorney Chesa Boudin.

• The recent statements could also show that Walgreens' closures were more tied to a shifting retail industry and efforts to cut costs, which Bloomberg reported years ago.

Between the lines: Walgreens isn't the only retailer in a complicated relationship with San Francisco.

• Tech gadget store B8ta, which had two stores in San Francisco, permanently shut locations across the nation in March 2022. Prior to its permanent closure, B8ta temporarily shuttered its San Francisco locations in February 2021 after an armed robbery at its Hayes Valley store.
• Apparel retailer Cotopaxi temporarily closed its Hayes Valley store in October after it was "hit by organized theft rings several times per week," according to its founder and CEO, Davis Smith, who called San Francisco "a city of chaos."
• But, but, but: Three weeks later, after public backlash, Cotopaxi reopened after "productive and positive meetings" with the Hayes Valley Merchants Association, city supervisors and SFPD, Smith said.

Reality check: Not all is fine and dandy.

• Walk into any San Francisco Walgreens today and much of what you'll need to buy is locked down behind plastic barriers.
• Still, as Walgreens showed us last week, the store closure story isn't as easy as saying it's all about theft.

What we're watching: Last month, Southern California state Assemblymember Al Muratsuchi introduced a bill (AB 23) that would lower the threshold for more serious retail theft from $950 to $400.

• The legislation would amend the 2014 voter-approved Prop. 47, which considered theft under $950 a misdemeanor in an effort to reduce incarcerations.
• "We need to protect our communities against retail theft crimes, or the 'smash and grab' crimes that have become commonplace," Muratsuchi told Axios.