
First-quarter results at Walgreens Boots
Alliance beat expectations, reassuring observers that the company is getting its retail mojo back. And despite its massive $6.2 billion operating loss, due to its settlement of recent opioid
litigation, Walgreens is showing how resilient its new business model is.
Sales slipped 1.5% to $33.4 billion, compared with $33.9 billion in the year-ago period. (On a constant currency
basis, revenues rose 1.1%.) Comparable retail sales in the U.S., excluding tobacco, rose 2.1%, a gain that's impressive given last year's 11.7% jump. Increased sales of strong cough, cold and
flu-related products helped, as did a 4.9% growth in beauty products and a 2.1% improvement in consumables.
Comparable prescription sales in its pharmacies rose 2.1%, excluding immunizations,
as new marketing initiatives gained traction.
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The Deerfield, Illinois-based company's net loss of $3.7 billion compares to a net income of $3.6 billion in the year-ago quarter
For the
full year, Walgreens now expects to achieve between $133.5 billion to $137.5 billion in sales, saying its "strong core business growth is more than offset by lapping fiscal year 2022 COVID-19
execution and currency headwinds."
"This increase reflects a boost in sales from recently acquired Summit Health, better-than-expected performance in its U.S. retail pharmacy, and a more
favorable foreign-exchange outlook," writes Julie Utterback, senior equity analyst, who follows Walgreens for Morningstar. That's despite waning coronavirus-related sales, such as vaccines and at-home
test purchases.
"Overall, we continue to appreciate the synergy between the company's retail pharmacy and healthcare services as Walgreens navigates through a tough competitive landscape in
retail and expands in the fragmented services market."
The report encouraged investors, who have sometimes struggled to get clarity, given Walgreen's aggressive expansion into the healthcare
business.
The company just closed its $3.5 billion deal to support VillageMD's acquisition of Summit Health. But in a conference call discussing earnings, it said it will hold off on
more big purchases for the time being.