'Challenging' market continues to hit Boots as profits drop 21%
Boots' parent company saw a 20.7% drop in profits for its retail pharmacy international division in the three months to August amidst a “challenging” market in the UK.
Walgreens Boots Alliance's adjusted operating income in its retail pharmacy international division – which includes Boots UK – fell to $194 million (£150.7m) for June-August, compared with the same period last year, the company said in its latest financial results, published today (October 28).
This is a 20.7% drop on a constant currency basis, and follows a 10.5% year-on-year drop recorded in the three months to May.
Pharmacy and retail sales decrease
Walgreens Boots Alliance also saw a 1% drop in comparable pharmacy sales, “primarily due to lower volume and lower NHS funding levels in the UK”.
Comparable retail sales decreased 2.7%, “with Boots UK maintaining a share in a retail market that remains challenging”, the company added.
Gross profit for the division decreased 5.4% on a constant currency basis, “mainly due to lower retail sales and margin in Boots UK and to lower pharmacy margin”, the company said.
Wholesale sales rise
Meanwhile, the company’s wholesale division – which includes Alliance Healthcare in the UK – saw sales increase by 7.9% compared with the same period last year, “led by emerging markets and the UK”, Walgreens Boots Alliance said.
Even though overall sales for the quarter across the whole of Walgreens Boots Alliance increased 2.6%, to $34 billion (£26.5bn), compared with the same period last year, adjusted operating income across the group fell 11.1%.
Announcing its previous financial results in June, Walgreens Boots Alliance said that it would close around 200 branches across the UK within the next 18 months, in response to “difficult market conditions in the UK”. C+D has since identified four of the 200 branches that will shut before next month.