That is a really common Walgreens story in some parts of the country and the managers are not really that stupid, they are running a game to scare off the couponers.
This whole issue stems from sales reports. Walgreens doesn't report back coupon redemption on sales reports (or at least it didn't in the past), so if a store had 1 million in sales, but half of that was reimbursed through coupons, a district manager will come down on a store manager and say that their sales totals are half of what they should be.
Walgreens wants so badly to compete with CVS but they have horrible middle management and lack of communication between the store and the corporate office - they run it military-style (not that military is bad, it just doesn't work for retail). Corporate Walgreens is very coupon friendly as you can see by their ads and the people you speak with, but they have not re-trained the thinking in the districts. All this would be solved with a 10 second change in how reports are printed and viewed. It's very sad.
The bottom line is that a drugstore doesn't make their money in front store, it's all in attracting and keeping prescription customers, and from what I've seen, they aren't very friendly there either. They'll continue to slip as CVS continues to grow.