Walgreens Boots Alliance reported 4.6% sales growth to $34.5bn and operating income was down 23.3% to $1.5bn for Q2 2019, which ended 28th February 2019.
US: poor performance offset by Rite Aid acquisition
Retail Pharmacy USA experienced 7.3% growth in Q2 sales to $26.3bn, compared with the same period a year ago, the result was driven by the acquisition of Rite Aid stores. Excluding the benefit of Rita Aid Stores, LFL sales grew 1.6% in Q2.
- Pharmacy sales accounted for 71.9% sales in the division, an increase of 9.8% compared with Q2 2018, primarily a reflection of higher prescription volumes driven by acquired Rite Aid stores
- For the retail division, sales grew 1.3% but LFL sales were down 3.8%. This result was predominately driven by a weak cough, cold and flu season, weaker seasonal marketing and a continued shift from selected products such as tobacco
- Operating income for Q2 declined 12.6% to £1.2bn compared with the same period a year ago
International performance: weak performance continues
The Retail Pharmacy international business experienced Q2 sales of $3.1bn, a decline of 7.1% compared with Q2 2019. On a constant currency basis sales were down 1.2%.
- The result was hindered by a 1.3% decline in Boots UK, a reflection of the challenging retail market. For Boots UK, LFL sales in pharmacy dropped 1.5% and for the retail division LFL sales were down 2.3%. In light of this result, Boots has announced it is taking steps to cut costs and subsequently warned over closures of poor performing UK stores
- Operating income decreased to $192mn, a decline of 22.6% compared with the same quarter a year go
Pharmaceutical Wholesale experienced Q2 sales of $5.7bn, a decline of 0.3% compared with Q2 2018.
On a constant currency basis, sales grew 9.1%, a reflection of growth in emerging markets and the UK.
Outlook: focus remains on strategic priorities
WBA announced its continued commitment to its existing transformation priorities, which have recently gained momentum by a number of senior level appointments.
- Accelerate digitalisation of the company: WBA is on track with its digital transformation programme, which has been boosted by key partnerships
- Transform and restructure retail offering: the retailer is investing heavily in its store and range proposition. In the UK, focus will be on revamping its beauty halls and range innovation in the category
- Create neighbourhood health destinations: WBA continues to innovate in services, boosting its store proposition and developing health hubs for local communities
- Transformational Cost Management Programme: the business has increased its annual cost savings target from in excess of $1bn to in excess of $1.5bn by FY2022
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