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Boots reports 'strong' last quarter as parent company reveals $3.1bn net loss

Walgreens Boots Alliance (WBA) has suffered a loss of $3.1 billion this fiscal year, despite a “strong” last quarter for Boots UK, it has revealed.

Boots’ parent company WBA yesterday (October 12) reported the results for the fourth quarter of its financial year, representing the three months to August 31. 

It revealed that the company withstood a net loss of $3.1 billion this fiscal year, “compared with net earnings of $4.3 billion in the year-ago period”.

The health and beauty giant made a net loss of $180m in its fourth quarter alone, marking an improvement from the fourth quarter of 2022, when it made a net loss of $415m. The company said this was “primarily driven by a lower operating loss”.

It comes as Boots reported a “strong final quarter” yesterday, noting an increase in both pharmacy and retail sales.

WBA said its yearly losses had been “driven” by an after-tax charge for “opioid-related claims and litigation in the period” and “lapping” of an after-tax gain on some of its investments the previous year. 

However, this had been “partly offset” by an after-tax gain from selling off some of its investments, it said.

Commenting on the announcement, WBA’s interim chief executive officer Ginger Graham said that the company’s “performance this year has not reflected WBA’s strong assets, brand legacy, or our commitment to our customers and patients”.

 

Taking “steps” to reduce costs

 

Ms Graham said that “in just six weeks”, WBA has “taken a number of steps to align our cost structure with our business performance”.

And she said that WBA plans to make “cost reductions of at least $1bn, and lowered capital expenditures by approximately $600m”. 

“We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter”, she added. 

 

A “strong” quarter for Boots 

 

Contrastingly, a statement released by Boots yesterday showed that the multiple had seen a solid fourth quarter, with “both pharmacy and consumer health sales growing year on year”.

The multiple’s pharmacy sales increased 9.9% compared with last year’s fourth quarter, while comparable retail sales increased by 11.7%.

It also revealed that consumer health and wellness sales have increased 8.6% compared to the 2022 quarter, and that orders for its Online Doctor has grown by 25% in the quarter.

Sales rumours 

Meanwhile, Boots said that its “store consolidation programme”, which it announced along with plans to close 300 branches earlier this year, is progressing “as planned”. 

The announcement followed a report by pharmacy sales specialists Hutchings that claimed that WBA was “in the throes of undertaking a strategic review of Boots pharmacies, possibly with an eye to a future sale”.

Hutchings claimed that “private equity investors are rumoured to be potential suitors”.

At the time, a Boots spokesperson told C+D that “nothing [had] changed” since June 2022, when WBA announced its decision to keep Boots under its ownership.

 

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