Walgreens Earnings Top Forecast as Drugstore Rides Out Covid

(Bloomberg) – Walgreens Boots Alliance Inc. posted stronger-than-expected results in its fiscal fourth quarter, as the drugstore giant continued to deal with the effects of the Covid-19 pandemic.

Adjusted earnings per share declined 28% from a year earlier to $1.02, though that was better than the 96 cents a share expected by Wall Street analysts. The company said it expects low single-digit growth in adjusted per-share earnings in fiscal 2021.

Key Insights
Walgreens’ U.S. sales grew 3.6% to $27 billion from the year-ago quarter. Prescriptions filled rose 1.6%. In the front of the store, where Walgreens sells beauty products, toothpaste and other convenience items, comparable sales increased nearly 5% thanks to health and wellness items while beauty product sales decreased.

Overseas, sales slid 15% from the year-ago period to $2.3 billion. Strict lockdowns have severely hurt sales at Walgreens’ Boots drugstores. Such restrictions are returning as the virus mounts a comeback in the U.K. and Europe.

There were signs of improving customer trends during the quarter, Chief Executive Officer Stefano Pessina said on a call with analysts. He said there’s clear evidence that when governments lift restrictions, customers return. While some elements of Walgreens’ business may change forever, Pessina said, the company’s positioning remains strong. “We are confident we will come out of this in better shape as an organization,” he said.

Pessina said in July said he will step down as CEO and move into the executive chairman role when the company names a successor. Walgreens didn’t provide an update on its CEO search in its earnings news release.

Market Reaction
Walgreens shares gained 0.8% in premarket trading. Walgreens said in July it would suspend stock buybacks and up its cost-cutting target to more than $2 billion in annual expenses by 2022. Through Wednesday’s close, the stock had fallen 39% this year.

Share: