25. DAVID BERNAUER

Nancy Brumback

Key Developments: Achieved 30th consecutive year of record sales and profits; 440 new stores this fiscal year.

What's Next: Push to fill 90-day maintenance medication prescriptions at retail stores, not by mandatory mail order.

In its annual report, Walgreen Co. adds an "amen" to a London journalist's report from Florida during one of last year's hurricanes. Noting that "local chemist Walgreens" was the last store in town still open, the journalist quoted an area radio station: "Good old Walgreens. At the end of the world, Walgreens will be open for another hour."

That, in the company's mind and, apparently, in the minds of its millions of customers, sums it up -- dependable, convenient, consistent -- qualities analysts and industry observers also attribute to David W. Bernauer, who's been chief executive officer since 2002 and who will have been with Walgreens 40 years next year. He started in 1966 as an intern before graduating as a pharmacist from North Dakota State University.

Thirty consecutive years of record sales and profits "reflects the company's personality. They're a bunch of pharmacists. They do the job right, double check, and making mistakes is not an option," noted Neil Stern, senior partner with McMillan/Doolittle, a Chicago retail consulting company.

That's not to say Walgreens doesn't innovate. The Deerfield, Ill.-based company has introduced features over the years that are now standard in the industry: computerized pharmacies connected nationwide, drive-through pharmacies, expanded selection of convenience foods and 24-hour stores. Recently, the chain added Intercom Plus, a pharmacy computer and workflow system that permits pharmacists to spend more time with customers and provides information sheets with a photo of the medication. And it's making a big move into digital photofinishing.

Walgreens is also challenging the cost savings on 90-day maintenance medications claimed by mail-order prescription companies. The company's Walgreens Health Initiatives (WHI) division offers 90-day prescriptions by mail order and through the retail drug stores under its Advantage90 program. WHI is now lobbying employers and drug-benefit providers to end mandatory mail-order programs for maintenance drugs.

While rival CVS' acquisition of Eckerd in 2004 pushed CVS ahead of Walgreens in store count, Walgreens refuses to concede its position as the nation's largest drug store chain. Its press releases proudly proclaim Walgreens is the largest in sales, and the Web site notes that in the 12 months that ended May 31, 2005, Walgreens had sales of $40.7 billion compared to CVS' sales of $34.3 billion, even though CVS operated 5,420 stores to Walgreens' 4,805.

Andrew Wolf, a managing director at BB&T Capital Markets, Richmond, Va., flatly stated, "CVS is not a threat to Walgreen at all. CVS doesn't take an iota of market share from Walgreen."

Wolf credits Bernauer for Walgreens' continued success. "David Bernauer took over from a strong leader and has risen to the challenge. Walgreen hasn't lost a step, and that's significant, because Daniel Jorndt (the previous CEO) was one of the strongest leaders in retailing."

He noted that Walgreens is at the leading edge of the move to add more food in drug stores. "They are increasing the amounts of food almost on a monthly basis," to take advantage of a shifting customer trend to stock up on staples at supercenters and warehouse clubs, then to fill in wherever they may be shopping, not just at supermarkets, he said.

George Rosenbaum, chairman, Leo J. Shapiro & Associates, a consumer and retail research firm in Chicago, speaks of "the McDonald's nature of Walgreens," with the same core assortment and virtually the same store layout in all stores, so customers are comfortable wherever they are. It is perhaps no surprise that the McDonald's CEO has just become a Walgreens director.

Bernauer, Rosenbaum said, has paired a front-of-store that's convenient and manageable and, above all, nearby with a pharmacy business that is "pushing technology to the most advanced state of the art."

Craig L. Fuller, president and CEO, National Association of Chain Drug Stores, the trade association where Bernauer serves as vice chairman and a director, hailed the Walgreens chief as one who "has earned the respect of his industry peers over his 35-plus years of professional experience, vast knowledge of the industry, and proven dedication to his employees and consumers."