WBA: mixed results for FY2019

Date : 29 October 2019

Walgreens Boots Alliance reported 4.1% sales growth to $136.9bn, and a 20.5% decline in operating income to $5bn for the full year to 31st August 2019.

WBA: mixed results for FY2019

Walgreens Boots Alliance reported 4.1% sales growth to $136.9bn for the full year to 31st August 2019.

The result follows a positive sales growth performance for FY2018, where the business achieved 11.3% growth to $131.5bn, boosted by the acquisition of Rite Aid. Operating income for FY2019 fell 20.5% to $5bn in the period.

WBA announced its continued commitment to its existing transformation priorities, which continue to gain momentum boosted by a number of senior level appointments.

WBA US Q4: pharmacy continues to drive the business

In the US, Retail Pharmacy experienced Q4 sales of $26bn, an increase of 2.1% compared with the same period in 2018. LFL sales increased by 3.4% compared with Q4 2019.

The business continues to benefit from the acquisition of Rite Aid in the US.

Pharmacy continues to drive the business, accounting for 75.1% of the division's sales in Q4, an increase of 4.2% compared with the same period a year ago. In contrast, retail sales for the US division decreased 3.9% in Q4, compared with the same period last year. In Q4, operating income fell 30.3% to $700m compared with Q4 2018.

In the year ahead, the US business will focus on accelerating its Transformational Cost Management Programme, with the business revising its annual cost savings target from $1.5bn to $1.8bn by FY2022. Digitalisation will also remain key to its growth strategy, with the business recently appointing a new digital director and trialing a drone delivery service.

WBA International Q4: weak performance for Boots UK

Internationally, WBA achieved $2.7bn in sales in Q4, a decrease of 6.3% compared with the same period last year.

On a constant currency basis, sales decreased 1.8%, mainly due to a 2.1% decline in Boots UK.  In Q4, Boots UK experienced a 1% decline in LFL pharmacy sales on a constant currency basis, predominately due to lower NHS funding in the UK. LFL retail sales fell 2.7%, due to challenging market conditions. Operating income fell 78.7% to $49m compared with Q4 2018.

For Boots UK's online business, Boots.com, sales grew 14.4% in FY2019 and 18.4% in Q4. The strong performance refelcts the retailer's continued drive to digitalise its business, recently digitalising its Advantage Card loyalty programme, enabling shoppers to collect and spend points via the app and access personalised offers on the go.

In the year ahead, Boots UK will continue to work on its Beauty Transformation programme through the roll out of its Fresh Look beauty-focused stores. Retail Analysis subscribers can read and download IGD's full store visit report on the Boots, Covent Garden flagship here. The retailer has also announced plans to revamp its pharmacy offer with new Express Pick-Up lanes, free online NHS prescription service and transformed store proposition.

Pharmaceutical Wholesale: LFL driven by emerging markets and the UK

Pharmaceutical Wholesale experienced Q4 sales of $5.7bn, an increase of 3.1% compared with Q4 2018. On a constant currency basis, LFL sales increased 7.9%, led by emerging markets and the UK.

Operating income came in at $129m for the quarter, a decline of 26.4% compared with the same period last year.

 

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