Walgreens beats Street amid omicron-related demand; U.S. comp sales surge

Walgreens Boots Alliance reported second-quarter sales and earnings that beat analysts’ estimates as the omicron variant drove customers to its stores for COVID test kits and booster shots.

The company said it administered 11.8 million vaccinations (62.8 million to date) and 6.6 million tests in the second quarter.

Walgreens reported net income of $883 million, or $1.02 per share, for the quarter ended Feb. 28, down from $1.026 billion, or $1.19 per share, in the year-ago period. Adjusted earnings per share of $1.59 were ahead of analysts’ estimates of $1.39.

Sales rose 3% to $33.8 billion from $32.8 billion, beating estimates of $33.2 billion. Comparable U.S. retail sales rose 14.7%, the largest gain in over 20 years. U.K. retail comparable sales increased 22%.

U.S. digital second-quarter sales increased 38%, on top of 78% in the year-ago period, driven by 3.9 million same-day pick-up orders.

"Second quarter results demonstrated broad-based execution, driving strong comparable sales and robust earnings growth,” said CEO Rosalind Brewer. “We continue to make important strides along our strategic priorities, building a consumer-centric, technology-enabled healthcare enterprise at the center of local communities. VillageMD and Shields are delivering tremendous pro forma sales growth compared to their year-ago standalone results, and our Walgreens Health segment is on track toward long-term targets.” 

In January, Walgreens confirmed rumors that it was exploring options for its U.K. Boots business. On Thursday, CEO Rosalind Brewer said the “strategic review is "progressing.”

Under the leadership of Brewer, Walgreens has focused on becoming a more health-oriented company. The retailer acquired the majority stake of VillageMD in October. It currently operates 120 co-located primary-care clinics. It expects to have 200 open by the end of this year, with a goal of at least 600 Village Medical sites at Walgreens locations in more than 30 U.S. markets by 2025. 

Walgreens is also allocating space in select store locations for a Health Corner that is staffed by nurses and pharmacists who can consult with patients on chronic conditions or other medical needs. It has opened 47 such spaces to date, with plans to have more than 100 in place by year-end.

In addition, the company has been opening automated microfullment centers in an effort to boost prescription-filling efficiency. To date, it has opened three centers and is on track for a total of 22 centers by the end of its fiscal year 2024.