Boots owner posts better-than-expected Q2 profit & sales

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Walgreens Boots Alliance update

The US-based parent company of Boots has reported better-than-expected second quarter profit and sales as the health and beauty retailer filled more prescriptions and kept costs down.

For the second quarter ending February 28, sales at Walgreens Boots Alliance increased 12.1 per cent year-on-year to $33 billion (£23.3 billion) and excluding items, diluted net earnings per share 27.2 per cent to $1.73 per cent.

According to Thomson Reuters, analysts on average were expecting a profit of $1.55 per share on sales of $32.19 billion.

The news prompted shares in the company to rise 4.8 per cent to $69.11 in premarket trading.

Meanwhile, net earnings attributable to Walgreens Boots Alliance increased 27.3 per cent year-on-year to $1.3 billion (£918 million) while adjusted net earnings increased 16.6 per cent to $1.7 billion (£1.2 billion).

Operating income increased 33.9 per cent to $2 billion (£1.4 billion) but on an adjusted basis, it increased 7.3 per cent year-on-year to $2.2 billion (£1.5 billion).

“Our growth strategy of increasing and consolidating volume, differentiating ourselves through value and quality of service, and controlling costs is bearing fruit across our businesses,” Walgreens Boots Alliance executive chairman and chief executive Stefano Pessina said.

“This is reflected in another good set of financial results in which we delivered the highest sales growth in eight quarters, as well as strong cash generation and record US pharmacy market share.”

Retail Pharmacy International, the business division under which Boots is a part, had second quarter sales of $3.3 billion (£2.3 billion), an increase of seven per cent from the year-ago quarter due to currency translation.

On a constant currency basis, sales decreased 2.6 per cent.

Meanwhile, comparable store sales decreased 1.7 per cent year-on-year on a constant currency basis, while comparable retail sales decreased 2.8 per cent on a constant currency basis mainly due to Boots UK.

However, Walgreens Boots Alliance said comparable pharmacy sales increased 0.6 per cent on a constant currency basis in its international division and gross profit increased 7.5 per cent year-on-year due to currency translation.

On a constant currency basis, adjusted gross profit decreased 2.3 per cent.

Finally, operating income in the second quarter increased 27.3 per cent year-on-year to $252 million (£178 million), while adjusted operating income increased 15.7 per cent to $280 million (£197 million), up 6.6 per cent on a constant currency basis.

The company raised the lower and upper ends of its outlook for 2018 and now anticipates adjusted diluted net earnings per share of $5.85 to $6.05.

The Walgreens Boots Alliance was formed shortly after Boots merged with its US counterpart Walgreens in 2014.

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