Walgreen Boots Alliance increased sales by 1.6% in its first financial year quarter, but operating profits dropped by 27.6%.
Operating profit fell to $1.0bn in the quarter to 30 November. Adjusted operating income was $1.5bn, a decrease of 15.6%, or 15.4% on a constant currency basis.
The operating income reflected costs related to the acquisition of Rite Aid stores and to the implementation of a cost management programme, according to the update.
The company maintained its guidance of roughly flat growth for the year on a constant currency basis and was on track to deliver in excess of $1.8bn in annual cost savings, the statement said.
Net earnings decreased 24.8% to $845m compared with the same quarter a year ago, while net earnings per share decreased 19.8% to $0.95.
Walgreens and Kroger formed a group purchasing organisation in the quarter aimed at “delivering cost savings and other benefits across owned brand sourcing”.
Other strategic updates in the period included the announcement of an exclusive franchise agreement between Boots and Mothercare, which will keep the latter on high streets following the UK chain’s collapse into administration in November.
Walgreen Boots Alliance’s Retail Pharmacy International arm, including Boots UK, had first quarter sales of $2.7bn, a decrease of 5.4%, reflecting an adverse currency impact of 2.7%, according to the results.
Sales decreased 2.7% on a constant currency basis, mainly due to lower retail sales in Boots UK and lower sales in Chile, reflecting social unrest.
Comparable pharmacy sales increased 0.6% on a constant currency basis, primarily due to the UK, driven by higher NHS reimbursement and increased sales of services, partially offset by lower prescription volume.
Comparable retail sales decreased 3.0% on a constant currency basis, with Boots UK holding share in a declining market, according to the update.
Gross profit decreased 6.3% compared with the same quarter a year ago, including an adverse currency impact of 2.6%.
Operating income decreased 43.7% to $44m, while adjusted operating income fell 40.5% to $79m, down 39.1% on a constant currency basis.
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