Walgreens Boots Alliance sees sales gains amid earnings drop

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Walgreens Boots Alliance sees sales gains amid earnings drop

By David Salazar - 06/27/2019
As Walgreens Boots Alliance increased its net sales in its fiscal 2019 third quarter — the company saw its net earnings decline. The company posted sales of $34.6 billion — an increase of 0.7%, which the company attributed to growth in its American retail pharmacy and pharmaceutical wholesales divisions — as well as $1 billion in net earnings — a 23.6% decrease over the prior year's third quarter

The company’s operating income also decreased by 24.7% to $1.2 billion, which WBA attributed primarily to costs of its Transformational Cost Management Program and lower equity earnings from AmerisourceBergen. With the cost management plan in place, though, leaders of the Deerfield, Ill.-based company are optimistic about the remaining quarter in its fiscal 2019.

“Following a difficult second quarter, we made progress in the third quarter against the strategic goals we set, and are pleased to report an improvement in our U.S. comparable growth compared with the first half of the year,” said Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO. “We will continue our aggressive response to rapidly shifting trends, and have already seen improved U.S. retail sales and prescription growth and are making good progress in implementing our Transformational Cost Management Program. Together, this gives us the confidence to reiterate the fiscal 2019 guidance we previously provided.”

WBA’s American retail pharmacy operations saw sales increase by 2.3% to $26.5 billion. Organic growth, excluding the impact of store optimization related to acquiring Rite Aid stores, was 2.9%. Pharmacy sales made up 73.9% of the segment’s sales in Q3 and increased by 4.3% over the prior-year period. Comparable pharmacy sales increased by 6%, with 290.7 million prescriptions and immunizations, adjusted to 30-day equivalents, getting filled in Q3, marking a 1.9% increase. The company’s retail prescription market share decreased by roughly 50 basis points from the prior-year period to 21.2%, which the company attributed to store optimization. Retail sales in the segment declined by 2.9%, with comps down 1.1%, which WBA attributed to the continued de-emphasis of tobacco.

Internationally, WBA saw retail pharmacy sales of $2.8 billion, a 7.3% decrease from the prior-year period, which the company said reflected a 5.7% adverse currency impact. On a constant-currency basis, sales decreased by 1.6%, largely due to a 1% decrease in Boots UK. The British pharmacy chain saw comparable pharmacy sales increased by 0.8% and comparable retail sales decreased by 2.6%, though Boots UK did increase its retail market share during the quarter.

The company’s pharmaceutical wholesale division saw Q3 sales of $5.9 billion, a decrease of $1.7 billion from the prior-year period, which the company attributed to a 10% adverse currency impact. On a constant-currency basis, the segment grew ales by 8.3%, which WBA attributed largely to growth in emerging markets. The company’s operating income of $87 million included a $16 million loss from the company’s equity earnings in AmerisourceBergen as the wholesales saw an impairment of PharMEDium’s long-lived assets in Q3.

The company affirmed its 2019 fiscal year guidance, projecting earnings per share to see a 6 cents-per-share impact from adverse currency.