Walgreens Revenue Misses Estimates On Weak international Demand
Walgreens Boots Alliance Inc came up short of analysts' estimates for quarterly revenue on Thursday, as sales of beauty products and prescription drugs fell at its UK-based Boots chain, dragging shares lower.
The United States' biggest retail pharmacy chain by number of stores, Walgreens has been striving to use online and international cosmetics sales as a replacement for losses in its core over-the-counter US drugs business to online players.
Impact Of International Unit
The company said comparable retail sales at its international unit fell 0.9% on a constant currency basis in the fourth quarter, mainly due to Boots UK, where the beauty category declined in the face of growing online competition.
Walgreens forecast 2019 adjusted profit of $6.40 to $6.70 per share, compared to analysts' expectations of $6.45 per share, according to Thomson Reuters I/B/E/S, although it said that number included the effect of $3 billion of share repurchases this year.
"On the surface, the earnings numbers might look okay, but operationally the metrics were below expectations and the guidance range is largely driven by share repurchases," Jefferies analyst Brian Tanquilut said.
"We're seeing some impact of Brexit on volumes."
Revenue rose 10.9% to $33.44 billion, but was below analysts' estimates of $33.78 billion.
Walgreens has been trying to boost sales through its prescription-only pharmacy business by signing separate pilot projects with online beauty retailer Birchbox and supermarket chain Kroger Co.
It bought 1,932 Rite Aid stores last year to widen its footprint in the United States and give it more heft to bargain better on price with drugmakers.
Benefiting from the extra stores, sales at its US pharmacies rose 16.7% in the fourth quarter, after the company filled 279.8 million prescriptions.
That helped net income attributable to the company, which was added to the Dow Jones Industrial Average index in June, rise to $1.51 billion, or $1.55 per share, from $802 million, or 76 cents per share, a year earlier.
Same-store sales at its pharmacies rose 1.3%, beating analysts' expectations for a 0.57% rise, according to eight analysts polled by Thomson Reuters I/B/E/S.
Excluding items, the company earned $1.48 per share, beating analysts' expectations of $1.45 per share.
The drug-store retailer's shares were down 2.5% at $70.50 in trading before the bell.