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Walgreens Boots Alliance Beats Profit Estimates On Cost Cutting

Published on Oct 21 2016 12:05 PM in Retail tagged: Featured Post / Boots / Walgreens / pharmacy / Walgreens Boots Alliance

Walgreens Boots Alliance Beats Profit Estimates On Cost Cutting

Walgreens Boots Alliance Inc. reported fiscal fourth-quarter profit that topped analysts’ estimates, as cost cutting and solid prescription growth made up for weak front-of-store retail sales in the U.S., its biggest market.

Earnings, excluding some items, were $1.07 a share in the quarter ended Aug. 31, the drugstore chain said Thursday in a statement, topping the 99-cent average of predictions compiled by Bloomberg. But revenue fell short of predictions. U.S. same-store retail sales, which exclude newest locations, declined 0.3 percent.

In spite of renovations of its stores’ cosmetics areas to bring in more shoppers, especially health-conscious women, the Deerfield, Illinois-based company has so far failed to boost sales of front-of-store products. Same-store retail sales in the U.S. have declined in three out of the past four quarters.

Rite Aid

Walgreens Boots, which is waiting for regulatory approval for its $9.4 billion purchase of Rite Aid Corp., also extended the end date of the agreement from Oct. 27 to Jan. 27 on Thursday, and now expects to close the deal in early 2017. The purchase could boost the number of U.S. pharmacies it owns to 12,000 or more from 8,200, depending on how many stores it is required to divest by regulators.

The slight delay in the Rite Aid deal closing time frame is a good sign, because it suggests that the companies are sorting out which stores to divest with the regulators, according to Ross Muken, an analyst at Evercore ISI who recommends buying the shares. It means regulators aren’t outright blocking the deal.

“The longer the process takes the more likely it is to close,” he said in a note to clients.

The shares rose 1.7 percent to $78.50 before the U.S. markets opened.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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