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Walgreens Extends Deal to Form GPO With Retail Giant Kroger

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Walgreens Boots Alliance (WBA - Free Report) recently announced its partnership extension with retail major Kroger (KR), aimed at winning customers and adding shareholder value. This time, the two will form a group purchasing organization (GPO) to increase purchasing efficiencies, lower costs and combine resources to drive innovation.  

This latest joint venture has been named Retail Procurement Alliance. Per Walgreens, the alliance will create supply chain efficiencies through use of collective resources. This will also enhance the companies’ combined ability to boost innovation for customers including their private-label brands to further meet customers’ evolving needs for value and convenience.

A Look Into Walgreen-Kroger Relation

In 2018, the companies jointly announced a partnership deal to sell brands owned by Kroger at a new store format (now called Kroger Express) across 13 Walgreens stores in Northern Kentucky. The selected Walgreens locations also offered Kroger Pickup facilities for online orders. Under this agreement, Kroger Express stores, known for extensive variety (average 2,300 products and up to 2,700 products), are supposed to help Walgreens generate higher customer traffic.

Later, in August 2019, Walgreens and Kroger expanded their collaboration contract, per which Walgreens-owned brand health and beauty products will be offered across 17 Kroger stores in Knoxville, TN, from this fall onward.

Recent Developments

Of late, Walgreens is focusing on forging partnerships with leading companies in order to solidify its market position. For instance, in January 2019, Walgreens and Microsoft signed a pact to establish health care delivery models as well as technology and retail innovation to advance and enhance the quality of healthcare.

Price Performance

The stock has declined 27.4% compared with the industry’s fall of 11.2% in a year’s time.

Zacks Rank & Stocks Worth a Look

Walgreens Boots currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , NuVasive, Inc (NUVA - Free Report) and ResMed (RMD - Free Report) . While ResMed sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics has a projected long-term earnings growth rate of 13.5%.

NuVasive has an expected long-term earnings growth rate of 10.9%.

ResMed has a long-term earnings growth rate of 12.9%.

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