The parent company of Boots has recorded poor first-quarter sales and profits in its international arm, which it blamed on weak market conditions in UK.
For the period ending November 30, Walgreens Boots Alliance said its Retail International division – of which Boots is a part – recorded sales of £2.3 billion, a decrease of 5.9 per cent year-on-year.
The firm said this reflected an adverse currency impact of 2.3 per cent.
On a constant currency basis, which included negative impacts of the divestiture of Boots Contract Manufacturing and a change in loyalty accounting, sales dipped 3.6 per cent.
Excluding these items, sales decreased 2.3 per cent, which Walgreens Boots Alliance attributed to weak UK market conditions.
In the UK, comparable pharmacy sales decreased 3.5 per cent and comparable retail sales decreased 2.6 per cent.
The company highlighted that Boots’ UK market share performance was “more than offset by a very weak retail environment”.
Gross profit decreased 7.8 per cent compared year-on-year and on a constant currency basis, adjusted gross profit decreased 5.6 per cent
Finally, operating income in the first quarter decreased 56.4 per cent year-on-year to £61 million, while adjusted operating income decreased 35.6 per cent to £104 million, down 34.6 per cent on a constant currency basis.
Walgreens Boots Alliance said approximately half of the decline was due to exceptional items and timing, with the balance due to UK market conditions.
Despite the dismal performance in its international arm, Walgreens Boots Alliance as a whole enjoyed double-digit growth for the first quarter.
Net earnings attributable increased 36.8 per cent to £860 million compared with the same quarter a year ago, while adjusted net earnings attributable increased seven per cent to £1.1 billion.
Sales in the first quarter were £26 billion, an increase of 9.9 per cent from the year-ago quarter, operating income was £860 million, an increase of 6.1 per cent from the same quarter a year ago.
“We are pleased to have delivered double digit percentage growth in earnings per share in the first quarter, including solid results in the U.S. We continue to focus on and invest in transforming our business,” Walgreens Boots Alliance chief executive Stefano Pessina said.
He added: “Today we are reaffirming our fiscal 2019 guidance and announcing the launch of a new transformational cost management program, which is targeting annual cost savings of more than $1 billion by the end of the third year, to better position ourselves to meet our long-term targets.”