The $1.6 billion (£1.3bn) operating loss for March-May this year compares to an operating income of $1.2bn (£940 million) for the same quarter a year ago, Walgreens Boots Alliance said in its latest financial report, published yesterday (July 9).

This drop is “mainly due to the no-cash impairment charges of $2 billion (£1.6bn) in Boots UK”, the company said, explaining that the worsening business conditions in the UK includes “the adverse impact of COVID-19 and resulting future uncertainty”.

It added that the UK is the market that has seen the “most significant COVID-19 impact”.

Lower footfall

The international retail pharmacy division – which includes Boots UK – saw sales of $1.9 billion (£1.5bn) between March and May, a 26% decrease on a constant currency basis. This drop was “mainly due to a 28% decrease in Boots UK sales as foot traffic in stores was severely disrupted by COVID-19 restrictions”, the company said.

Adjusted operating income for the division decreased by $308m (£240m), to an adjusted operating loss of $143m, (£113m). for March-May. This is a 192% drop compared to the $165m (£129m) adjusted operating income for the same period in 2019.

Adjusted gross profit decreased 36%, on a constant currency basis, reflecting “lower retail sales in Boots UK and lower retail gross margin, largely due to supply chain costs.”

Earlier this year, Walgreens Boots Alliance attributed a 2.5% drop in adjusted gross profit for December 2019-February 2020 to “lower retail sales and margin” in its UK pharmacies

Lockdown measures affect sales

Comparable retail sales for Boots UK decreased 48%, as “lockdown measures impacted high streets and shopping centers and compelled consumers to consolidate shopping into grocers”, the company said.

However, this decrease was “partially offset by a 78% rise in Boots.com sales, as the pandemic restrictions boosted online sales”, the company said.

Comparable Boots UK pharmacy sales decreased 1% on a constant currency basis, “reflecting lower prescription volume and reduced demand for services during the pandemic, mitigated in part by timing on NHS reimbursement”.

The estimated adverse COVID-19 impact on adjusted operating income for the international retail pharmacy division was $365m-$390m (£284m-£304m).

Wholesale sales rise

Meanwhile, the company’s pharmaceutical wholesale division – which includes Alliance Healthcare in the UK – saw sales increase by 5.3% on a constant currency basis compared with the same period last year, “led by the UK and Germany”, Walgreens Boots Alliance said.

James Kehoe, global chief financial officer of Walgreen Boots Alliance, said in a webcast yesterday that the group’s wholesale division “delivered yet another strong performance”.

“We were faced with significant footfall declines across most of our markets in retail pharmacy international and especially in the UK,” Mr Kehoe said, adding that this  was “only partly compensated” by much-faster growth from its online businesses.oots has now closed 76 of the 200 loss-making UK branches it announced last year that it would close or sell by September 2020.

The company also announced yesterday that it would reduce its Boots UK workforce by 4,000, but told C+D that these redundancies are “not expected” to affect pharmacists and pharmacy advisors.