In the second quarter, Walgreens retail sales in the U.S. edged up as the company prepared for the spread of COVID-19 to the country.
Net income was $946 million, or $1.07 per diluted share, versus $1.16 billion, or $1.24 per diluted share, in the year-previous quarter. Adjusted for one-time events, net earnings were $1.34 billion, or $1.52 per diluted share, versus $1.52 billion, or $1.64 per diluted share, in the quarter a year before. Adjusted diluted earnings per share topped a MarketBeat analyst consensus estimate of $1.46.
Sales in the second quarter advanced 3.7% to $35.82 billion versus the year-earlier quarter and 4.1% on a constant currency basis. Effects from the COVID-19 pandemic began to tell at the end of the second quarter but were not material to overall results, Walgreens asserted.
Compared to the same quarter a year past, operating income was $1.23 billion, down 18.7%, reflecting lower U.S. pharmacy gross margin and year-over-year bonus changes, partially offset by cost savings from the company’s transformational cost management program.
The retail pharmacy U.S. division posted a sales increase of 3.8% to $27.2 billion with comparable sales increasing 2.7% from the year-prior quarter. Comps from retail sales, excluding pharmacy, increased 0.6% in the quarter year over year. Operating income fell 21.5% to $963 million with bonus impact, a reimbursement contract event, costs related to the acquisition of Rite Aid stores and the transformational cost management program all factoring into the difference.
Stefano Pessina, Walgreens executive vice chairman and CEO, said, “We are pleased to report second quarter results exceeding our expectations, with sequential improvement in comparable U.S. prescription volume and retail sales. During these unprecedented times of global uncertainty, Walgreens Boots Alliance is on the front lines of combating the COVID-19 pandemic. Our number one priority is to continue to provide essential services, products and information at this critical moment of need, demonstrating our unwavering commitment to our customers and patients, and to our people.”