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Walgreens Q3 Beats Street But Retail Comps Slip

Walgreens beat Wall Street estimates in its third quarter, although retail comps slipped. The company released its third quarter results following the news that Amazon is acquiring an online pharmacy.

For the third quarter, Walgreens Boots Alliance posted net earnings of $1.34 billion, or $1.35 per diluted share, versus $1.16 billion, or $1.07 per diluted share, in the fiscal year earlier.

Company adjusted earnings, excluding one-time charges, were $1.52 billion, or $1.53 per diluted share, versus $1.44 billion, or $1.33 per diluted share, in the year-prior period. A Zacks Investment Research analyst average estimate called for adjusted diluted earnings per diluted share of $1.47.

Net sales were $34.33 billion versus $30.12 billion in the previous third quarter. Operating income was $1.6 billion as compared to $1.52 billion in the fiscal year before.

Walgreen’s Retail Pharmacy USA division recorded third quarter sales of $25.9 billion, up 15% over the year-earlier period. Comparable sales decreased 1.2% versus the period a year prior. Retail sales gained 5.2% in the period year over year, but comparable retail sales slid 3.8% in the quarter, with the company adding that the figure reflected a focus on profitability.

In the third quarter, Walgreens completed the acquisition of 1,932 Rite Aid stores as part of an amended and restated asset purchase agreement. It anticipates transitioning three distribution centers and related inventory beginning in fiscal 2019 and to complete the integration of acquired stores and associated assets by the end of fiscal 2020.

Stefano Pessina, Walgreens executive vice chairman and CEO, said, “I am pleased that, in what has been a challenging environment, we have again delivered solid earnings per share growth combined with healthy cash flow. We expect to continue to drive growth, bringing more patients to our U.S. pharmacies through the recent acquisition of Rite Aid stores and through strategic partnerships.”