Walgreens Boots Alliance FY20 results highlighted resilient performance from its USA pharmacy and retail division while its International division’s performance impacted by weak store sales at Boots UK.
Performance on the divisions
Walgreens Boots Alliance reported revenue growth of 2% to US$139.5bn (2019: US$136.87bn) and a decrease in operating profit by 73.7% to US$1.3bn (2019: US$5bn) for the year ending 31st August 2020.
Retail Pharmacy USA
- Retail Pharmacy sales increased by 3.6% to US$27bn and comparable store sales increased by 3.6% compared to the same quarter last year
- Pharmacy sales accounted for 75.6% of the division’s sales was up by 4.2% compared with the year -ago quarter. Comparable pharmacy sales increased by 3.2%
- Retail sales increased 1.5%, including the impact of store optimisation programs. Comparable retail sales rose by 4.7% due to the boost in health and wellness category and 8% growth in personal care category. This was partly offset by 3% decline in beauty category
- Walgreens.com grew by 39%
Retail Pharmacy International
- Retail Pharmacy sales declined by 14.9% to US$2.3bn and 15.4% on a constant currency basis this was mainly due to Boots UK sales decline of 16.7%
- Boots UK comparable retail sales declined 29.2% on a constant currency basis as footfall was impacted because of COVID-19, particularly in high street, train station and airport locations. Footfall was reported to increase steadily this quarter compared to Q3
- Market share for Boots UK was low in all categories expect beauty as COVID-19 impacted buying habits and consumers shifted purchasing to one-stop grocery shopping
- Boots.com sales rose exponentially by 155% (Q3 2020: +78%)
- Comparable pharmacy sales in Boots UK increased by 0.4% on a constant currency basis attributed by lower prescription volume and reduced pharmacy led services
- Its Chinese retail pharmacy chain, GuoDa expanded to more than 7,500 pharmacies, almost double the number when the WBA-GuoDa relationship began
- Sales increased by 4.3% to US$6bn. On a current currency basis, sales increased 4.3% led by emerging markets, Germany, and France
- Operating income came in at US$ 124mn for the quarter, a decline of 3.9% compared with the same period last year
Key priority to turnaround Boots UK for 2021
WBA’s top priority for 2021 is to turnaround its Boots UK business. It announced that Boots UK is taking swift action to increase profitability by using targeted marketing activity to boost sales. With strong performance from Boots online, the business has worked to extend its order fulfilment capabilities such as its in-store pickup option in almost 90% of stores along with its hybrid stores positions the business well as it prepares for the festive season.
The success of its online beauty launches and premium brands such as Mac and NARS cosmetics helped boost sales and it further looks to invest in its No7 brand by installing new No 7 counters and fixtures in almost 300 stores.
WBA’s outlook for 2021
WBA anticipates a steady reduction in COVID-19 impacts for the year 2021, with H1 2021 performance to be negatively impacted compared to pre-COVID H1 2020. However, it is optimistic that performance in H2 2021 will be stronger as the effects of the global crisis subsides, and recovery plans kicks in.
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