Walgreens’ Q4 profit beats Street; yearly sales top $103 billion

DEERFIELD, IL — Fresh on the heels of its announced $17.2 billion acquisition of Rite Aid, Walgreens Boots Alliance reported fourth-quarter net earnings of $26 million Wednesday — compared to a $221 million loss during the same period last year — and finished significantly ahead of analyst expectations. Net sales climbed almost 50% to $28.5 billion during the quarter, which ended August 31.

For the year, the company posted net earnings of $4.2 billion, an increase of more than 118% over its fiscal year 2014 performance. Total sales topped $103 billon for the year.

On an adjusted basis, the company posted net earnings of $969 million in the fourth quarter, up more than 30% over last year, or some 88 cents per share — seven cents higher than analyst expectations.

“We are pleased with our progress and performance in the fourth quarter and in our first fiscal year since launching Walgreens Boots Alliance,” noted Executive Vice Chairman and CEO Stefano Pessina. “While we have much work to do and operate in some challenging markets, we are excited and energized by the outlook and opportunities ahead as we put in place our strategies for long-term, sustainable growth. We believe we can shape the future of health care around the world through our ability to bring global solutions to local communities, benefiting all participants, populations and stakeholders.”

Here in the U.S., the company’s Retail Pharmacy division finished the year with total sales of $81 billion — up 6% over fiscal 2014 — driven by total comparable store sales growth of 6.4%. On a comp-sales basis, pharmacy same-store sales increased 4.6% for the year, while front-end comps grew a more modest 1.5%, which the company attributed to “an increase in basket size partially offset by lower customer traffic.”

For the fourth-quarter, Walgreens and Duane Reade stores generated total sales of $19.9 billion, up 4.7% versus the same period one year ago, with total comparable-store sales up 6.5%. Pharmacy same-store sales grew 10% during the fourth quarter, with front-end comps inching up just 0.4%.

In all, pharmacy represented about 66% of total sales for the year, and more than 67% for the fourth quarter. Including immunizations, the U.S. segment filled 894 million prescriptions during the year, growing its share of the U.S. retail prescription market by some 20 basis points to 19.1%, the company noted, citing data from IMS Health

As part of its ongoing cost-savings initiatives in the United States, the company closed 84 stores during fiscal year 2015 — 75 of them in the fourth quarter alone. Walgreens finished the year with a total of 8,173 stores, a net decrease of 34 stores year-over-year.

In all, the company planned to close a total of some 200 underperforming stores through fiscal 2017 under its previously announced plan to cut about $1.5 billion in costs. According to the company, it had “achieved more than half of the program’s expected savings” by the end of fiscal year 2015. In addition to store closings, the plan also targeted savings through reorganizing its divisional and field operations teams, driving operational efficiencies, and streamlining information technology and other functions.