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Boots’ parent blames poor UK retail sales for 3% gross profit drop

Boots’ parent company has attributed a 3.6% drop in its adjusted gross profit to lower retail sales and margin in its UK pharmacies.

Walgreens Boots Alliance said the drop in its international retail division – which includes Boots UK – for September-November 2019, compared to the same period the previous year, reflected “lower retail sales and margin in Boots UK”.

Comparable retail sales for the division decreased 3% year-on-year on a constant currency basis, with Boots UK “holding share in a declining market”, the company said in its latest financial report, published today.

However, comparable pharmacy sales for the division increased 0.6% on a constant currency basis, which was “primarily due to the UK, driven by higher NHS reimbursement and increased sales of services”.

The international retail division recorded sales of $2.7 billion (£2.1bn), a 2.7% decrease on a constant currency basis compared to the previous year.

This decrease was “mainly due to lower retail sales in Boots UK”, as well as lower sales in Chile as a result of civil unrest.

39% drop in operating income

Adjusted operating income for the international retail pharmacy division dropped to $79 million (£60m), a 39% fall on a constant currency basis, compared to the same period the year before. 

It follows a 20.7% drop in operating income for the division in the previous three months.

Wholesaler growth “led by UK”

The company’s wholesale division, which includes Alliance Healthcare in the UK, saw sales of $6bn (£4.6bn), compared to the same period the previous year.

Comparable sales for the division were up 8.3% year-on-year, on a constant currency basis. This growth was “led by emerging markets and the UK, including a customer contract change in the UK”, Walgreens Boots Alliance said.

Across the whole of Walgreens Boots Alliance, overall sales for the three-month period increased 2.3%, to $34.3bn (£26.1bn), compared to the same period last year. However, adjusted operating income across the group fell 15.4%.

What do you think of the latest Walgreens Boots Alliance report?

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