CHICAGO — Despite the specter of its standoff with pharmacy benefit manager Express Scripts Inc., Walgreen Co. sounded a positive note at its annual shareholders meeting here.

Executives said Walgreens is coming off a strong fiscal year — which saw the nation’s largest drug chain turn in record profits, its biggest increase in net income in a decade and its largest growth in earnings per share in more than 15 years — and they vowed that more good times are ahead.

The battle with Express Scripts, executives stressed, was nothing more than a blip on the screen.

“We believe the long-term implications of accepting Express Scripts’ below-market proposal would have been much worse than the short-term impact on earnings,” president and chief executive officer Greg Wasson told the more than 2,000 shareholders gathered earlier this month in the Grand Ballroom at the city’s historic Navy Pier.

“The benefits of this decision will be far more positive in the long term than the negative impact they have had in the short term,” he noted.

Although the battle with Express Scripts has been a key factor in the decline of Walgreens’ stock price, which has lost nearly a quarter of its value over the past year, Wasson and executive vice president and chief financial officer Wade Miquelon said the setback is just another in a long line of seemingly negative developments that Walgreens has been able to overcome over the years.

Just like the advent of deep-discount drug stores in the 1980s, the proliferation of mail order pharmacy in the 1990s and the rise of Internet retailing in the early part of this century were seen by some as the death knell for traditional chain drug retailers such as Walgreens, predictions that the loss of the prescriptions covered by Express Scripts will cause irreparable harm are premature, Miquelon noted.

“We are set up to be successful and with or without Express Scripts we will be,” he said.
Miquelon and Wasson told shareholders that Walgreens has a well-conceived, multipronged strategy to ensure that it stays on top of its game for years to come.

“Our opportunity now is to combine the best locations in America with an outstanding customer and patient experience — what we call the ‘Well Experience,’ ” Wasson said.

The latest example of that strategy is the company’s new flagship store in Chicago’s Loop. Opened at a site where Walgreens has had a store since 1926, the outlet features an enhanced pharmacy designed to encourage greater interaction between pharmacists and patients; a Take Care Clinic walk-in health center; an Upmarket Cafe with a juice bar and fresh, hand-rolled sushi; and a Look Boutique beauty department, offering prestige and niche cosmetics, skin care and hair care brands not typically found in drug stores.

Wasson added that Walgreens’ Well Experience concept is expected to play a key role in the company’s efforts to take community pharmacy in a new direction. Unveiled in the fall of 2010, the store format has since been rolled out to more than 20 locations in the Chicago area.

And this week, Walgreens plans to hold the grand reopening of all its Indianapolis market stores that have been converted to the Well Experience format.

Wasson explained that these stores give patients greater access by bringing the pharmacist out from behind the counter. In addition, the company has tightly integrated its retail clinics and pharmacies with this new approach to create what it calls “a community health corner” in its stores.

“With these innovative changes we can more easily and quickly expand the scope of services we can offer in our drug stores, such as immunizations and vaccinations, and acute and primary care,” Wasson said.

“We’re stepping out of the normal drug store and creating something completely new,” he noted. “We’re leveraging the real estate we have across the country to do good as well as do good business.”

Yet playing a greater role in Americans’ health care, Wasson said, is only part of the way that Walgreens will continue to stay on top as America’s premier drug chain. He cited several other core elements of the retailer’s strategic plan, including efforts to ensure that its stores deliver an outstanding customer experience; offer customers a broader array of shopping options, ranging from its traditional stores to online and mobile applications; and continue to drive down operating costs.