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Boots’ parent blames ‘COVID-19 related impacts’ for 11.5% profit drop

The £370m advanced funding helped to mitigate some of the effects of the COVID-19 pandemic
The £370m advanced funding helped to mitigate some of the effects of the COVID-19 pandemic

Boots’ parent company, Walgreen Boots Alliance, has attributed a 11.5% profit drop in the UK to “COVID-19 related impacts”.

Adjusted gross profits for the international retail pharmacy division – which includes Boots UK – dropped by 11.5% for the September-November period, compared to the same quarter a year ago, Walgreens Boots Alliance announced today (January 7).

In its latest financial report, the company said the profit decrease, which was on a constant currency basis, reflects “lower UK retail sales and higher fulfilment costs, partly offset by the favourable timing of NHS reimbursement”.

Last year, the Pharmaceutical Services Negotiating Committee announced it had secured a total of £370 million in advanced funding for contractors in England, in “recognition of the significant cashflow pressures facing the sector…in the COVID-19 pandemic”.

Pharmacy sales up

Boots UK’s comparable pharmacy sales increased 2.5%, compared to the same three months to November 2019, which Walgreens Boots Alliance said was reflective of the £370m advance funding.

This “mitigated the impact of lower prescription volume and reduced demand for pharmacy services during the pandemic”, the company said.

Meanwhile, retail sales decreased 9.1%, compared to the same quarter a year ago, with COVID-19 continuing to impact footfall, “particularly in major high street, train station and airport stores”.

“The ongoing recovery in footfall trends in September and October was set back by the re-introduction of stricter [social] restrictions for the month of November,” Walgreens Boots Alliance added.

Online sales increase significantly

Sales for increased 106% in the three months to November, partially offsetting the reduced footfall, the company said.

The company’s wholesale division – which at the time included Alliance Healthcare in the UK – saw sales increase 16.3% on a constant currency basis, compared with the same period last year.

Adjusted operating income increased 7.4% on a constant currency basis, to $244 million (£179.8m), “reflecting strong sales growth and a higher contribution from AmerisourceBergen” – the company that has recently acquired Alliance Healthcare.

Exceeding expectations

Overall sales for the quarter across the whole of Walgreens Boots Alliance increased 5.2% on a constant currency basis to $36.3 billion (£26.7bn), compared with the same period last year, which CEO Stefano Pessina said “exceeded expectations”.

“While the business environment remains challenging, we are rising to the occasion with agility and discipline and we are confident in our outlook,” Mr Pessina added.

“Our role in the healthcare system has never been more important, as the communities we serve continue to turn to our trusted brands and expert pharmacists. I am so proud of our teams and the historic and critical role they are playing to help the world emerge from the pandemic, administering COVID-19 vaccinations to frontline healthcare workers and vulnerable members of our society.”

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Dave Downham, Manager

"...favourable timing of NHS reimbursement"

I've just checked with my accountant, and this phrase is meaningless.

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