Walgreens tops earning targets as retail growth offsets Covid decline

• Walgreens Boots Alliance reported quarterly sales and profitability that beat estimates.
• Shares fell by roughly 2% in premarket trade after the release of the earnings report.
• The company has increased its online offerings, such as curbside pickup and delivery.

As its retail sales increased and its online sales increased, Walgreens Boots Alliance on Thursday reported quarterly sales and profitability that beat estimates.

However, when demand for Covid-19 vaccines declined and the company maintained rather than increased its annual projection, shares fell by roughly 2% in premarket trade. It stated that it anticipates low single-digit growth in adjusted profits per share.

Using data from Refinitiv, the following table compares what the company reported with what analysts had predicted for the three months ending May 31:

Earnings per share: adjusted 96 cents vs. anticipated 92 cents
Revenue: $32.6 billion versus the anticipated $32.06 billion

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In the quarter, net income decreased from $1.2 billion, or $1.38 per share, a year earlier to $289 million, or 33 cents per share. A $683 million penalty connected to its opioid settlement with the state of Florida, a drop in U.S. pharmacy sales as it finished off a large number of Covid-19 immunizations a year ago, and expenditures in its growing health care sector were the main causes of the abrupt dip.

Excluding items, the business earned 96 cents per share, above the Refinitiv survey of analysts’ expectations of 92 cents.

Sales dropped from $34.03 billion to $32.6 billion from the previous year. Analyst estimates were for $32.06 billion.

Due to the increased demand for Covid-19 vaccines and testing in its stores during the pandemic, Walgreens has seen an increase in sales. As a result of declining demand, the business must find new strategies to stimulate growth.

In contrast to the 15.6 million vaccines administered in the first quarter and the 11.8 million administered in the second quarter, the corporation only administered 4.7 million vaccines in the third quarter.

With Walgreens signing a contract with VillageMD to set up hundreds of medical offices at its shops, health care has become a top priority.

In an effort to divert shoppers from purchasing toothpaste, soap, and other things from online retailers like Amazon, Walgreens has also increased its online offerings, such as curbside pickup and delivery. The business said that the popularity of its digital solutions increased in the quarter, increasing by 25% from a year earlier, on top of the period’s 95% rise. According to the firm, 2.8 million same-day pickup orders contributed to the growth.

Retail sales increased in the US and the UK as people started going out again. Without tobacco, same-store sales in the U.S. increased by 2.4 percent, and for Boots U.K. retail, they increased by 24 percent.

Walgreens announced earlier this week that it will postpone plans to sell its Boots business, based in the United Kingdom, due to market volatility. The business said in January that it was researching its options, including a potential sale, as a strategic move for that division.

The value of Walgreens’ stock had decreased by roughly 22% as of Wednesday’s closure. The company’s market capitalization is $35.30 billion as of Wednesday’s closing price of $40.87 per share.

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