Walgreens Posts Strong Q3 Earnings, Appoints Pessina CEO

For the third quarter ended May 31, Walgreens Boots Alliance posted net earnings attributable to the company of $1.3 billion, or $1.18 per diluted share, versus $714 million, or 74 cents per diluted share, in the year-earlier quarter. As it released results, Walgreens announced that the company’s board of directors had named Stefano Pessina as CEO and that it had acquired Liz Earle Beauty Co.

Liz Earle produces a premium skin care product range, popular in the United Kingdom, that incorporates what Walgreens Boots characterized as naturally active ingredients.

Already executive vice chairman, Pessina had been acting CEO. He will continue reporting to James Skinner, executive chairman.

In the quarter, Walgreens Boots stated, net sales gained to $28.8 billion versus $19.4 billion in last year’s period.

According to the company, adjusted third quarter net earnings attributable to Walgreens Boots Alliance increased 39.9% to $1.1 billion versus last year’s period. Adjusted net earnings per diluted share for the quarter increased 22.9% to $1.02 year over year, it related.

Zacks Investment Research published an analyst average estimate of 87 cents per diluted share.

The company’s Retail Pharmacy USA division, including Walgreens and Duane Reade operations, reported third quarter sales of $20.4 billion, up 5.3% compared with the year-ago period. Comparable drug store retail sales advanced 1.6% based on an increase in basket size partially offset by lower customer traffic compared with last year’s quarter. Overall comparable store sales, including pharmacy contribution, increased 6.3%, Walgreens Boosts maintained.

“In just six months since the strategic combination that formed Walgreens Boots Alliance, we are beginning to make progress in our operations, as we were able to deliver another strong quarter,” Pessina said. “Our Retail Pharmacy USA division produced a solid increase in comparable prescriptions filled in the quarter, along with improved retail front-end margins and very good cost control. Our other divisions continued to perform as we expected. Of course, there is more work to be done as we move forward. The fourth quarter is typically the slowest quarter because of seasonality in the business, while prescription reimbursement pressure continues to impact our pharmacies, making retail margin expansion and cost control as important as ever.”

Skinner said, “In Walgreens Boots Alliance’s initial six months as a newly combined company, Stefano has done an extraordinary job leading the new enterprise, focusing our strategy while enhancing our financial performance. The integration of Walgreens and Alliance Boots is proceeding exceptionally well, with Stefano’s vision for the company driving the organization forward. Through his leadership, our organization is meeting the challenges of combining our two companies, and many of the opportunities we anticipated from our strategic combination are now becoming a reality. In order to continue this momentum and to recognize the progress that is already being made, the board concluded Stefano is the very best person to achieve our vision to be a truly global health care champion, the first choice for pharmacy, health care and wellbeing across the world.”