WBA: Q2 2019

Date : 02 April 2019

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

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.

  1. Accelerate digitalisation of the company: WBA is on track with its digital transformation programme, which has been boosted by key partnerships
  2. 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
  3. Create neighbourhood health destinations: WBA continues to innovate in services, boosting its store proposition and developing health hubs for local communities
  4. 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

 

Want to know more?

Retail Analysis subscribers can read and download our latest insight on Walgreens Boots Alliance here.