Walgreens Q3 Earnings Fall Short Of Estimate

The COVID-19 pandemic weighed on Walgreens Boots Alliance third quarter sales as did a charge against its business in the United Kingdom.

The company posted a net loss of $1.71 billion, or $1.95 per diluted share, versus company net earnings of $1.03 billion, or $1.13 per share, in the quarter a year earlier.

Company adjusted net earnings, excluding extraordinary events, was $723 million or 83 cents per diluted share, versus $1.34 billion, or $1.47 per diluted share, in the year-prior period. A Zacks Investment Research analyst consensus estimate was for first quarter adjusted diluted earnings per share of $1.10.

Versus the previous year’s quarter, sales increased 0.1% to $34.63 billion, up 1.2% on a constant currency basis, led by Retail Pharmacy USA comparable sales growth that came in at 3.2%. Comparable retail sales gained 1.9% in the period year over year. With tobacco and e-cigarettes sales excluded, comp retail sales increased 3.5% in the period. A change in shopping patterns that occurred in the quarter affected comps, Walgreens maintained, with increased demand for vitamins and PPE leading to a 9% increase in the health and wellness category. The personal care category increased 5% while declining demand for discretionary items led to a 9% decrease in the beauty segment versus the year-before quarter.

Operating loss was $1.58 billion, compared to operating income of $1.2 billion in the period a year past, mainly due to a non-cash impairment charge of approximately $2 billion in Boots U.K.

Stefano Pessina, executive vice chairman and CEO of the company, said, “Prior to the pandemic our financial performance for fiscal 2020 was on track with our expectations. However, this unprecedented global crisis led to a loss in the quarter as stay-at-home orders affected all of our markets. I’m very proud of how all of our teams mobilized and adapted to deliver essential services in our communities across the world. Shopping patterns are evolving more rapidly than ever as consumers further embrace digital options, spurring us to accelerate our ongoing investments in digital transformation and neighborhood health destinations. This includes our two recent announcements: a significant expansion of our primary care clinics collaboration with VillageMD, and our strategic partnership with Microsoft and Adobe to launch a personalized omnichannel health care and shopping experience.”