Walgreens Boots Alliance has difficult quarter

Walgreens Boots Alliance has difficult quarter
The quarter has been the "most difficult" since the formation of Walgreens Boots Alliance (WBA) at the end of 2014

3 April 2019 - Deborah Wilkes

Walgreens Boots Alliance (WBA) reported organic growth of 2.5% in the three months ended 28 February 2019. Executive vice chairman Stefano Pessina said the quarter had been the "most difficult" since the formation of the company at the end of 2014.

Including the impact of acquisitions and divestments, worldwide sales were up by 6.7% at constant currencies to USD34.5 billion. Growth reflected the acquisition of 1,932 Rite Aid stores in the US, which started towards the end of 2017.

During the quarter, said Pessina, WBA had faced "significant reimbursement pressure" as well as "continued consumer market challenges in the US and the UK".

WBA had begun initiatives to address these trends, added Pessina, but its response had not been "rapid enough given market conditions". This had resulted in a "disappointing quarter that did not meet our expectations", he said.

WBA's largest division – Retail Pharmacy USA, which houses the Walgreens and Duane Reade chains – reported sales up by 7.3% to USD26.3 billion in the quarter.

Excluding the benefit from acquired Rite Aid stores, sales growth was 1.6% on an organic basis.

Sales down 1.3% at Boots UK

The Retail Pharmacy International division reported sales down by 7.1% to USD3.08 billion. On a constant currency basis, sales were down by 1.2%.

WBA said the decline was mainly due to a 1.3% fall at Boots UK.

The division also encompasses Boots in Thailand, Norway, Ireland and the Netherlands, as well as Benavides in Mexico and Ahumada in Chile.

The Pharmaceutical Wholesale division, which mainly operates under the Alliance Healthcare brand, recorded sales down by 0.3% to USD5.7 billion in the quarter. On a constant currency basis, sales increased by 9.1%.

WBA's operating income was USD1.5 billion, representing a fall of 23.3% compared to the same period a year earlier. Adjusted operating income was down by 10.4% to USD1.9 billion.

In the six months ended 28 February 2019, worldwide sales at WBA rose by 7.2% to USD68.3 billion. At constant currencies, growth was 9.0%.

WBA describes itself as the "first global pharmacy-led, health and wellbeing enterprise".

The US-based company says that – together with the organisations in which it has equity method investments – it has more than 18,500 stores in 11 countries as well as wholesaling interests in more than 20 countries.

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