Walgreens Earnings (WBA) 3rd quarter 2022

The Walgreens Boots Alliance said Thursday that its quarterly sales were down and profits were hit by declining vaccine demand for Covid-19, major investment in the healthcare business and opioid settlement with Florida.

Shares fell about 4% in morning trading.

The pharmacy chain stood on its forecast for the whole year, saying that it expects the adjusted earnings per share to increase by low single-digit levels. It showed the recovery of store traffic and more online traffic. And he said investing in healthcare, such as opening clinics in stores, would pay off in the future.

With inflation hitting consumer wallets, CEO Roz Brewer said Walgreens is working with suppliers to make sure it has lower prices than competitors. He said Walgreens has historically seen steady prescribing trends in an economic downturn.

“There is a shift in calculus due to food and fuel inflation, but health and well-being will always be a priority,” he told analysts.

In addition, the company’s pharmacy locations – within walking distance, by bus or by car from many customers – give Walgreens an advantage as petrol costs more, he said.

See what the company said compared to what analysts expected for the quarter ended May 31, based on Refinitiv data:

  • Earnings per share: 96 cents adjusted against 92 cents expected
  • Income: $ 32.6 billions against the $ 32.06 billion expected

In the quarter, net income fell to $ 289 million, or 33 cents a share, from $ 1.2 billion, or $ 1.38 per share, a year earlier. The sharp drop reflects a $ 683 million charge for its opioid settlement with the state of Florida, a drop in U.S. pharmacy sales as it achieved a large volume of Covid-19 vaccinations a year ago and investment in the expanding healthcare business.

Excluding the data, the company gained 96 cents per share, exceeding the 92 cents expected by analysts surveyed by Refinitiv.

Sales fell to $ 32.6 billion from $ 34.03 billion a year earlier. Analysts had expected $ 32.06 billion.

Walgreens has boosted its sales during the pandemic as customers flocked to its stores for vaccines and Covid-19 tests. This demand is weakening, pushing the company to drive growth in other ways.

The company provided 4.7 million vaccines in the third quarter, a sharp drop from 15.6 million vaccines in the first quarter and 11.8 million in the second quarter.

However, Global Chief Financial Officer James Kehoe said Walgreens now expects to receive 35 million vaccinations against Covid this year, up from 31 million previously expected.

This is slightly higher than the 34.6 million vaccinations given last fiscal year, when vaccines were limited because they were first delivered to nursing homes and long-term care facilities.

Although Walgreens faces other challenges, including high inflation, Kehoe said Covid remains the biggest stranger to shaping the pharmacy’s performance.

Healthcare has been boosted, with Walgreens entering into an agreement with VillageMD to open hundreds of clinics in its stores.

Walgreens has also expanded its online options, such as pick-up and drop-off on the sidewalk, to try to prevent customers from buying toothpaste, soap and other items from online players such as Amazon. The company said its digital options were up 25% from a year earlier, up from 95% last year. The growth was fueled by 2.8 million same-day orders, the company said.

In the US and the UK, in-store sales increased as consumers came out again and again. Retail sales in the same stores in the US, which include items from the front of the store, such as shampoos, toothpaste and more, increased by 2.4%, excluding tobacco. This was prompted by the sale of Covid home tests and medicines for coughs, colds and flu.

In the pharmacy segment, sales at the same stores in the US increased by 2% compared to last year – but overall prescriptions fell. This section includes vaccinations.

In the UK, retail sales in the same store increased by 24% in Boots – largely reflecting low sales and fewer store visits last year. Pharmacy sales in the same store remained almost stable, down 0.4%.

Earlier this week, Walgreens said it would drop its plans to sell the UK-based Boots company. The company said in January that it was considering strategic options for this segment, including a possible sale.

Brewer said Thursday that the company has spoken to several interested parties about the possible sale of the Boots. However, he said the company decided to maintain the chain as conditions in global markets changed.

Walgreens shares have fallen about 22% so far this year as of Wednesday. Shares closed at $ 40.87 on Wednesday, raising the company to $ 35.30 billion.

Read the company’s profit announcement here.

Walgreens Earnings (WBA) 3rd quarter 2022

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