The Walgreens store on State Street and Randolph Street in Chicago.
Nancy Stein | Chicago Tribune | Tribune news service via Getty Images
Walgreens Boots Alliance on Thursday reported quarterly sales and earnings ahead of expectations as retail sales recovered and online shopping picked up.
But shares are down about 2% in premarket trading as demand for Covid-19 vaccines eased and the company reiterated rather than raised its full-year guidance. Expected adjusted earnings per share to grow in the low single digits.
Here’s what the company reported compared to analysts’ expectations for the three-month period ended May 31: based on Refinitiv data:
- Earnings per share: 96 cents adjusted vs. 92 cents expected
- Revenue: $32.6 billion vs. $32.06 billion expected
For the quarter, net income fell to $289 million, or 33 cents a share. from $1.2 billion, or $1.38 per share, in the prior year. The sharp decline reflected a $683 million charge related to the state of Florida’s opioid agreement, a drop in US pharmacy sales as the company abandoned a high volume of Covid-19 vaccines a year ago and investing in its expanding healthcare business.
Excluding items, the company earned 96 cents per share, beating the 92 cents expected by analysts polled by Refinitiv.
Revenue fell to $32.6 billion from $34.03 billion last year. Analysts had expected $32.06 billion.
Walgreens has increased sales during the pandemic as customers turned to its stores for Covid-19 vaccines and testing. That demand is waning, driving the company to look to other ways to drive growth.
The company administered 4.7 million vaccines in the third quarter, a sharp decrease from the 15.6 million vaccines in the first quarter and the 11.8 million in the second quarter.
Healthcare has become a major driver as Walgreens struck a deal with VillageMD to open hundreds of doctor’s offices in its stores.
Walgreens has also expanded online options like curbside pickup and delivery to try to discourage customers from buying toothpaste, soap and other items from online players like Amazon. The company said its digital options gained popularity during the quarter, growing 25% year over year, in addition to growing 95% in the year-ago period. The growth was fueled by 2.8 million same-day pickup orders, the company said.
Retail sales in the US and UK rebounded as consumers got back on the move. US same-store sales increased 2.4% ex-tobacco and Boots UK retail increased 24%.
Earlier this week, Walgreens announced it was halting plans to sell its UK-based boats business, citing market volatility. The company said in January it was reviewing strategic options for the business, including a potential sale.
As of Wednesday’s close, Walgreens shares were down about 22% so far this year. Shares close at $40.87 on Wednesday, bringing the company’s market value to $35.30 billion.
This story evolves. Please check back for updates.