Problems are piling up at Walgreens – not least a bizarre $200 million legal dispute with one of the drugstore giant’s salespeople That became “very unpleasant” for the company’s 82-year-old CEO, The Post has learned.
Meanwhile, billionaire Stefano Pessina — whose Walgreens Boots Alliance announced last week that it is laying off 5% of the company’s workforce as it battles pharmacy strikes and a shoplifting epidemic — is in the middle of an ugly lawsuit from Cooler Screens, one of his businesses co-founded startup, caught former Walgreens CEO Greg Wasson.
In 2019, Pessina — who, according to a source, has a “friendly” relationship with Wasson despite the litigation and is not named in the lawsuit — greenlit a multiyear contract to install video screens that display advertisements on refrigerator doors at Walgreens stores becomes. The collaboration grew as Cooler Screens, also with support from Microsoft, installed 10,300 “smart doors” in about 700 stores, according to court documents.
But problems began two years later when Pessina also installed Roz Brewer, a former Starbucks executive, as Walgreens’ new CEO. During a tour of Walgreens stores early in her tenure, Brewer expressed her dislike of the cooler screen doors and compared them “disparagingly” to “Las Vegas,” according to court documents.
According to a source close to the company, Cooler Screens was among Pessina’s “favorite projects” that Brewer abandoned during her difficult two-and-a-half-year tenure, which ended in September. A month later, she was replaced by healthcare veteran Tim Wentworth after reports that her own forays into healthcare, including $14 billion in buyouts, failed to bear fruit.
Brewer did not immediately respond to a request for comment from The Post.
Elsewhere, Brewer defeated a pilot project with Kroger in 2018 that allowed customers to order groceries online and pick them up at Walgreens stores in Kentucky. It had also ended a partnership with Microsoft and Adobe that allowed Walgreens to personalize retail and pharmacy offerings.
“The tensions [between Pessina and Brewer] were known at Walgreens,” said the source with knowledge of their relationship. “She made it clear that she was not there to take orders from the billionaire Walgreens owner and former CEO.”
In fact, Brewer made the decision to terminate the Cooler Screens contract and “she was unwilling to discuss it with the board members and executives who questioned her about it,” Cooler Screens’ complaint states.
“It wouldn’t surprise me if Roz and Stefano clashed,” said John Ransom, an analyst at Raymond James. Citing his experience reporting on the company rather than direct knowledge of the alleged dispute, Ransom said there was a “generational gap” between them.
Now Walgreens is demanding that Cooler Screens get its doors back. The retailer removed five of them this summer, claiming in court filings that some doors caught fire, didn’t function properly and weren’t generating promised revenue. Walgreens claims the contract expired in February and the doors generated 1,496 work orders, including doors that went dark.
That came after Deerpark, Illinois-based Cooler Screens sued Walgreens in June for breach of contract, blaming poor maintenance of its refrigerators and freezers for technical problems. It pointed to records showing Walgreens was $1.3 million behind on overdue maintenance related to refrigeration equipment, according to court documents.
Cooler Screens credits Pessina’s “unwavering support and encouragement” as the driving force behind the partnership. The Chicago-based tech company refers to Pessina at least eight times in its heavily redacted complaint, while Walgreens does not mention its chairman by name at all in its countersuit.
“It’s very embarrassing for Stefano,” said the source familiar with the situation, who says Pessina has been advocating for Cooler Screens “behind the scenes” and still supports the company.
Pessina — whose Switzerland-based pharmacy chain Alliance Boots merged with Walgreens in 2014 and Wasson left shortly after after five years at the helm — did not respond to an email seeking comment.
A Walgreens spokesman said Pessina was not available to speak with The Post and the company does not comment on pending litigation. Arsen Avakian, CEO and co-founder of Wasson and Cooler Screens, also declined to comment.
According to a source familiar with the situation, the “smart doors” had resulted in a 2% to 3% increase in sales at the Walgreens locations where they were deployed. However, those revenues have since declined as many advertisers have been scared off by the litigation, according to court documents.
There’s also a risk that the doors will simply close as Cooler Screens and Walgreens blame each other for failing to pay Verizon and T-Mobile bills that keep advertising flowing, court papers say.
Last week, a Pepsi commercial was repeated at a Walgreens in Manhattan at West 38th Street and Broadway, featuring a can labeled “New Look. Same great taste.”
Despite the disagreements with Walgreens, Cooler Screens has a nearly four-year partnership with Kroger, which plans to have 100 stores by the end of the year, according to a source familiar with the deal. A press release this year said Kroger had committed to 500 stores. The tech company also works with Giant Eagle and Chevron, but Walgreens is by far its largest customer.
A judge has not yet ruled on an Oct. 10 motion by Walgreens to dismiss Cooler Screens’ lawsuit. The law firms representing Cooler Screens, including lead attorney Armstrong Teasdale of Chicago, are doing so on a contingency basis, a person familiar with the situation told The Post.