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Boots’ parent links falling UK retail sales to 2.5% gross profit drop

Walgreens Boots Alliance said the future impact of COVID-19 on the business is "uncertain"
Walgreens Boots Alliance said the future impact of COVID-19 on the business is "uncertain"

Boots’ parent company has attributed a 2.5% drop in its adjusted gross profit to “lower retail sales and margin” in its UK pharmacies.

Walgreens Boots Alliance said the year-on-year profit drop in its international retail division – which includes Boots UK – for December 2019-February 2020, reflected “lower retail sales and margin in Boots UK”.

Comparable retail sales for the division decreased 4.6%, on a constant currency basis, compared to the same period the previous year. This compares to a 3% decrease for September-November 2019.

However, Boots still “held share in its categories, in a declining market”, the company said in its latest financial report, published yesterday (April 2).

Comparable pharmacy sales for Boots UK increased 1.8% on a constant currency basis, which Walgreens Boots Alliance attributed to “higher NHS reimbursement, partially offset by lower prescription volume”.

The international retail division recorded sales of $3.1 billion, (£2.5bn), a decrease of 1.7% on a constant currency basis compared with the same quarter last year.

The was “mainly due to a 1.2% decline in Boots UK sales”, as well as lower sales in Thailand and Chile, the company said.

24% drop in operating income

Adjusted operating income for the international retail division dropped to $198 million (£161m), a 24% fall on a constant currency basis, compared to the same period the year before.

It follows a 39% drop in operating income for the division for September-November 2019.

The company’s pharmaceutical wholesale division - which includes Alliance Healthcare in the UK – saw an 8% increase in sales on a constant currency basis, “led by emerging markets and the UK”.

COVID-19 impact

Prior to the COVID-19 pandemic, Walgreens Boots Alliance was “on track to maintain fiscal 2020 guidance of roughly flat growth” in adjusted earnings per share at constant currency rates, the company said

However, the future impact of the outbreak is “uncertain” and updates will follow in the next financial report, Walgreens Boots Alliance added . “Effects from the COVID-19 pandemic” on company sales “began at the end” of the three-month period and “were not material to overall result”, it said.

1 Comments
Question: 
What do you make of the latest Walgreens Boots Alliance financial results?

Kevin Western, Community pharmacist

It would be more interesting to hear what they thought of the "Advance" and what they told the PSNC

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