On a day like today, with the Dow Jones Industrials Average
Shares of Walgreen were already having a rough year following the company's dispute with partner Express Scripts
Not really. Many are calling the deal too pricey, and Alliance Boots is practically a pure play on Europe. Yes, that debt-laden and seemingly dysfunctional corner of the world that most investors are running away from -- well, Walgreen wants in. It's tempting to say this is a reaction to fill the void following the Express Scripts impasse, but management assures us that this deal has been in the works since before the spat was an issue. Either way, it seems like a risky and expensive play for Walgreen, and S&P seems to agree. The ratings service plans to cut the company's investment-grade A rating down to triple-B if the deal advances as planned. Investors here may want to stock up on some aspirin in advance, because the pain doesn't look like it's over yet.
J.C. Penney did Walgreen one better, though, and fell 8.6% on the news that the company's president, Michael Francis, is stepping down after less than one year on the job. This is a huge blow to investor confidence, as the key factor in J.C. Penney's turnaround strategy has been top-flight management. At least the company still has Ron Johnson, formerly the magician behind Apple's retail division, as CEO.
There could be any number of reasons for Francis' departure, but my guess he saw how dysfunctional the company was on the inside and, realizing what a pipe dream a big turnaround was going to be, checked out while the getting was good. Considering the company recently went back on its much-hyped no-more-sales strategy, a cornerstone in its rebranding effort, the picture looks grim. I'm not going to say a turnaround is impossible, but the odds seem firmly stacked against it.
The other love-to-hate turnaround retailer, Sears Holdings
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