Boots recovery boosts WBA results, Walgreens also strong

By

Sandra Halliday

Published
Jan 7, 2022

Walgreens Boots Alliance is upbeat as its first quarter beat expectations and it upgraded its full-year earnings guidance aided both by its US ops and a recovery in its UK unit.

The owner of the key UK Boots chain and the giant US Walgreens business said Q1 earnings per share (EPS) from continuing operations reached $4.13, compared with a loss of $0.45 in the year-ago quarter.

Sales from continuing operations increased 7.8% to $33.9 billion, rising 7.6% on a constant currency basis. And operating income from continuing operations increased to $1.3 billion. Net earnings on that basis were $3.6 billion, compared to a loss of $391 million in the year-ago quarter.

The results “surpassed expectations across business segments” and it said Boots’ comparable retail sales surged 16.3% while those at its US retail ops rose 10.6%.

It’s now increasing its full-year adjusted EPS guidance to low-single-digit growth, from flat previously, to reflect that first quarter performance and “continued positive momentum”.

The company said its international segment saw Q1 sales of $5.8 billion in total, an impressive increase of 35.8% from the year-ago quarter, including a favourable currency impact of 1.6%. Sales increased 34.2% on a constant currency basis, including higher sales associated with the formation of company's wholesale joint venture in Germany. Excluding this benefit, International segment sales on a constant currency basis rose 8.6%, “reflecting the ongoing recovery in the UK market, following the lifting of Covid-19 restrictions in July”.

Boots UK comparable retail sales surged, as mentioned earlier. That came as footfall improved, although traffic remains below pre-Covid-19 levels. However, online ops appear to be taking up the slack and Boots.com continued to perform well, with digital sales in the first quarter almost doubling compared to the equivalent pre-Covid quarter.

Gross profit increased 21.9% on the year, including a favourable currency impact of 3.7%. The rise reflected that strong UK growth, and higher gross profit associated with the inclusion of a full quarter of results from the German wholesale JV.

The much larger US ops saw Q1 sales of $28 billion, an increase of 3.2% on the year, but held back by a decline in the AllianceRx Walgreens Prime business. Comparable sales increased 7.9% from the year-ago quarter.

Retail sales increased 10.1% and excluding tobacco and e-cigarettes, comparable retail sales increased 11.7%, reflecting broad-based growth across all categories. Beauty and personal care increased 11.6%.

Gross profit at the unit rose 12.6% compared with the year-ago quarter.