Walgreens Boots Alliance (WBA) has cut its fiscal year profit forecast on lower demand for COVID-19 tests and vaccines and lower consumer spending.
The fourth quarter is expected to be negatively impacted by a higher effective tax rate, shifting US consumer spending and the impact of the flu season, the company said.
It now expects annual adjusted earnings per share of $4.00 to $4.05, from $4.45 to $4.65 previously.
Chief executive officer Rosalind Brewer said, "Our revised guidance takes an appropriately cautious forward view in light of consumer spending uncertainty, while still demonstrating clear drivers of a return to operating growth next fiscal year.
"We are raising our cost savings programme target to $4.1 billion (€3.8 billion) and taking immediate actions to optimise profitability for our US Healthcare segment. I am confident that our turnaround strategy positions WBA to drive sustainable core growth and deliver long-term shareholder value."
Third-Quarter Performance
Excluding one-off items, the company reported earnings of $1 per share for the quarter ended 31 May, compared to analysts' average estimate of $1.07 per share, according to Refinitiv IBES data.
Rosalind Brewer added, "WBA achieved 8.9% constant currency sales growth in the third quarter despite a challenging operating environment. Consumers continue to appreciate the value, convenience, and range of services provided by Walgreens and Boots."
Divisional Performance
In the US, retail pharmacy segment saw sales worth $27.9 billion (€25.5 billion), up 4.4% year on year, while comparable sales increased 7.0% from the year-ago quarter.
The company's international segment generated sales worth $5.6 billion (€5.1 billion) in the latest quarter, registering a year-on-year increase of 5%.
Sales increased 6.9% on a constant currency basis, with Boots UK seeing sales growth of 10.2%, and the Germany wholesale business growing 3.8%.
Boots UK comparable pharmacy sales increased 5.7% compared with the year-ago quarter, while Boots UK comparable retail sales increased 13.4%.
Boots.com reported 25% year-on-year growth in sales, accounting for over 14% of retail sales.
News by Reuters, additional reporting by ESM – your source for the latest retail news. Click subscribe to sign up to ESM: European Supermarket Magazine.
