Walgreens Weighs Cost Cutting Moves

Walgreens Boots Alliance maintained that it was encouraged by its sales growth in its fiscal year and fourth quarter results ended August 31, while the retailer stayed on track with its cost cutting initiatives.

Fiscal 2019 net earnings decreased to $4 billion, while net earnings per share decreased to $4.31, compared with the prior year. Sales increased 4.1% to $136.9 billion in fiscal 2019 compared with the prior year. On a constant currency basis, sales increased 5.8%.

For the fourth quarter, net earnings decreased to $677 million compared with the same quarter a year ago, while net earnings per share decreased to $0.75 compared with the same quarter a year ago. The results reflect higher charges as the company accelerated its transformational cost management program.

Sales in the fourth quarter were $34 billion, an increase of 1.5% from the year-ago quarter, and an increase of 2.6% on a constant currency basis.

The company’s retail pharmacy USA division had fourth quarter sales of $26 billion, an increase of 2.1% over the year-ago quarter. Excluding the impact of store optimization following the acquisition of Rite Aid stores, organic sales growth was 2.9% in the quarter. Sales in comparable stores increased 3.4% compared with the same quarter a year ago. Retail sales decreased 3.9% in the fourth quarter compared with the year-ago period. Comparable retail sales decreased 1.2% in the quarter.

The company said its transformational cost management program is on track and it is increasing targeted annual savings from the program from in excess of $1.5 billion to in excess of $1.8 billion, by fiscal 2022.

Stefano Pessina, Walgreens executive vice chairman and CEO, said, “We are pleased to report fiscal 2019 results in line with our previously stated guidance despite a challenging operating environment. We are also making progress on our four strategic priorities, which we remain confident are positioning us to deliver long-term growth. While we still face headwinds, I am encouraged by the improvement in U.S. comparable sales performance in the second half of fiscal 2019 and our progress in managing costs in order to save to invest to grow. We are introducing guidance for fiscal 2020 adjusted earnings per share, which we expect will be roughly consistent with fiscal 2019 at constant currency rates— very much in line with our expectations.”