Walgreens Boots Connection reported fiscal first-quarter earnings Thursday that exceeded Wall Street’s expectations, helped by stronger-than-expected druggists sales.
Walgreens shares were up more than 5% Thursday afternoon.
Here’s what Walgreens broadcast compared with what analysts were expecting for the first quarter ended Nov. 30, based on Refinitiv data:
- Earnings per share in: $1.22 cents, adjusted vs. $1.03 expected
- Revenue: $36.31 billion vs. $34.95 billion expected
In the quarter, Walgreens posted a net erosion of $308 million, or 36 cents per share, compared with net income of $845 million, or 95 cents per dispensation, a year earlier.
Excluding a charge from its AmerisourceBergen investment, it earned $1.22 per share, higher than the $1.03 surmised by analysts surveyed by Refinitiv.
Sales rose to $36.31 billion from $34.34 billion a year earlier, outpacing the $34.95 billion that analysts envisioned.
Walgreens said its pharmacy sales picked up in the U.S. as it filled more prescriptions and gave flu shots. Comparable pharmacy tradings rose 5% compared with a year earlier. The higher sales came despite less foot traffic, farther down sales of cough, cold and flu medications, and fewer new prescriptions as people skipped the doctor’s office and socially distanced during the Covid pandemic.
In the Merged Kingdom, Walgreen’s comparable pharmacy sales rose 2.5% compared with a year ago, largely due to a reimbursement from the Subject Health Service. Boots UK stores have been particularly hard-hit by restrictions during the pandemic. The NHS payment helped make amends a drop in prescription volume.
Walgreens reiterated its outlook for low single-digit growth in adjusted earnings per share this year. Yet the corporation cautioned it will face headwinds in the second quarter as the U.K. has another lockdown and customers continue to limit trips to the department store.
“We’re much better at managing through lockdown now, which is good, but still it is a cloud in the future,” Chief Financial Tec James Kehoe said on a Thursday earnings call. “And then secondly, you see the large number of incidences in the U.S., that does dulcet quickly drive through to lower medical visits.”
For the company, that means fewer prescriptions to fill and fewer stopovers to its stores.
Yet Kehoe said Walgreens remains focused on long-term opportunities rather than short-term, pandemic-related provocations. He said the company has cut costs and is investing in growth areas as the drugstore industry faces disruption and the pandemic changes shopping regularities. It’s adding more health-care services and expanding its digital offerings. It unveiled a new mobile app and now offers curbside pickup at its U.S. markets, which can have online purchases ready for customers in as little as 30 minutes.
It announced plans in July to uncommitted hundreds of primary care clinics at its stores staffed and operated by VillageMD. It said Wednesday it would accelerate the programme for that and expects to have 600 to 700 clinics open within the next four years.
On Wednesday, it also reported it would divest its drug distribution business in Europe by selling it to U.S. drug wholesaler AmerisourceBergen for $6.5 billion. The on the block will allow Walgreens to focus on its pharmacy and retail businesses.
The company has nearly completed its planned store closures. Kehoe replied it has shuttered 232 of the 250 Walgreens stores slated for closure, and 158 of the 200 Boots UK stores. He said it’s on apprehend to deliver more than $2 billion in annual cost savings by fiscal 2022.
Last year, it cut more than 4,000 nuisances at its Boots UK and Boots Opticians businesses, a 7% reduction of the workforce in those units.
Walgreens Boots Alliance CEO Stefano Pessina is stepping down after five years in the place, but his successor has not yet been named. Its rival, CVS Health, is also getting a new CEO. Karen Lynch will succeed longtime CVS Chief Supervisory Larry Merlo in February.
Walgreens started administering Covid vaccines in mid-December to staff and residents at nursing home bases and other long-term care facilities. It plans to offer the shots to the general public at its drugstores, once they’re at.
Walgreens shares have fallen about 28% over the past one year, bringing its market value to $37.2 billion.
Look over the company’s full press release here.