- Retail pharmacy giant lurches to first quarter loss
- Boots.com delivers bumper Black Friday sales
- Walgreens raises full-year sales outlook
Shares in Walgreens Boots Alliance (WBA:NASDAQ), the drugstore behemoth behind iconic brands Walgreens and Boots, fell 6.1% to $35.19 on Wall Street despite the US company delivering forecast-beating first quarter results and raising its full-year sales outlook.
Investors focused on Walgreens’ swing from profits of $3.6 billion to an unadjusted net loss of $3.7 billion for the quarter ended 30 November 2022 after taking a $6.5 billion opioid litigation charge.
BOOTS IN RUDE HEALTH
Retail pharmacy powerhouse Walgreens abandoned plans to sell Britain’s best-known high street chemist Boots last year, arguing potential buyers couldn’t raise sufficient funds due to instability in financial markets.
The aborted sale has proved something of a blessing in disguise for Walgreens, as the UK-based health and beauty retailer generated surprisingly robust sales in the run-up to Christmas in the face of the cost-of-living crisis.
While Boots’ UK like-for-like pharmacy sales softened 0.9% in the quarter due to lower year-on-year demand for Covid-19 services, UK retail like-for-like sales increased 8.7% year-on-year amid a marked recovery in store footfall.
Walgreens said Boots.com continued to perform well in the quarter and delivered its biggest ever single day of digital sales on Black Friday.
LITIGATION HIT
Last year, Walgreens and pharmacy competitors CVS Health (CVS:NYSE) and Walmart (WMT:NYSE), agreed to pay roughly $13.8 billion to resolve thousands of US state and local lawsuits accusing the trio of prescribing ultra-addictive opioid pain drugs too often.
One of America’s biggest pharmacy chains, Walgreens also saw demand for the Covid vaccine shots it administers fall from last year’s peak.
Nevertheless, first quarter adjusted earnings per share of $1.16 beat the $1.14 forecast by analysts as Walgreens benefited from an early flu season, which boosted sales of over-the-counter cough and cold medicines.
And deal-hungry Walgreens upped its annual revenue guidance range to $133.5 billion to $137.5 billion outlook following better than expected first quarter sales and the US healthcare arm’s recent acquisition of Summit Health.
SOLID START
While shares in Walgreens Boots Alliance are down more than 30% over one year, CEO Rosalind Brewer remained upbeat, stressing the company had delivered a solid start to the fiscal year, as we continue to accelerate its transformation to a consumer-centric healthcare company.
‘We’re making significant progress in driving our US Healthcare segment to scale and profit, including the recent VillageMD acquisition of Summit Health.’
Brewer added: ‘Our core retail pharmacy businesses in both the US and UK remain resilient in challenging operating environments. Execution across segments reinforces our confidence in achieving full-year guidance, and our strategic actions are creating long-term shareholder value.’
