Walgreens Weathers Rough Q2

Walgreens Boots Alliance was pressured in its second quarter when it battled market headwinds including weak sales of seasonal goods.

The company reported net earnings of $1.16 billion, or $1.24 per diluted share, versus $1.35 billion, or $1.36 per diluted share, in the year-prior quarter. Adjusted net earnings, excluding one-time charges, were $1.52 billion, or $1.64 per diluted share versus $1.72 billion, or $1.73 per diluted share. Walgreens Boots missed a MarketBeat published analyst consensus estimate of $1.72 per diluted share.

Net sales were $34.53 billion versus $33.02 billion, while operating income was $1.52 billion versus $1.98 billion in the year-previous quarter.

In the Retail Pharmacy Division USA, sales came in at $26.26 billion with operating income of $1.23 billion versus $24.48 billion in sales with operating income of $1.4 billion, in the year-before quarter.

Comparable retail sales in the division fell 3.8% in the period year over year, in part because of a weak cough cold and flu season in the past winter, lower tobacco sales and weakness in seasonal merchandise.

Stefano Pessina, Walgreen Boots executive vice chairman and CEO, said trends in the pharmacy and broader business had hit the company in the second quarter.

“We are going to be more aggressive in our response to these rapidly shifting trends,” he said. “We are focusing on our operational strengths and addressing weaknesses, making a number of senior appointments to bring change and accelerating the digitalization and transformation of our business. This will include expediting the execution of our partnership initiatives, fully developing our in-store neighborhood health destinations, re-imagining our front end retail offering, optimizing our store footprint and increasing the annual savings goal of our transformational cost management program from in excess of $1 billion to more than $1.5 billion. As a result of these actions, our business model will deliver improved performance in fiscal 2020, positioning us for mid-to-high single-digit growth in adjusted EPS in the following years.”