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03/31/2021

Walgreens profit rises as weak cold and flu season takes a bite out of sales

Marianne Wilson
Editor-in-Chief
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Walgreens Boots Alliance reported second-quarter sales that missed Street expectations amid a weak cold and flu season in the U.S. and reduced foot traffic in the U.K. 

Net income totaled $1.03 billion, or $1.19 per share, in the quarter ended Feb. 29, up from $946.0 million, or $1.07 per share in the year-ago period. Adjusted EPS of $1.40 beat the FactSet consensus for $1.10 per share. 

Sales rose 4.6% to $32.78, missing estimates of   $36.59 billion. Walgreens said its digitally-initiated retail sales increased 78% in the quarter. 

In the United States, total sales inched up 0.4% to $27.3 billion. Total comparable sales increased 2%. In the U.S. retail segment, sales decreased 6.6%, reflecting the adverse impacts from the store optimization programs and the 2020 leap day. 

Comparable U.S. retail sales fell 3.5% due to a weak cough, cold and flu season. Within comparable retail sales, discretionary categories continued to decline, with beauty down 8.8%. Excluding the impact of seasonal flu, sales in the health and wellness category increased 9.1%.

The company said it has administered more than 8 million COVID-19 vaccinations including 4 million in March, and has provided some 5 million COVID-19 tests.

“Overall, we have achieved a good financial quarter with results well ahead of expectations, despite significant impacts from COVID-19, and we have raised our full-year EPS guidance," said Walgreens' CEO Roz Brewer, who took the reins of the company earlier this month. "I am optimistic about our ability to drive sustainable, long-term value for our shareholders, while acknowledging that there is still work to be done to stabilize the base business. I will continue to review closely all our initiatives, strategies and opportunities to capitalize fully on the incredible potential in front of us.”

Walgreens raised its fiscal 2021 adjusted EPS guidance to mid-to-high single-digit growth in constant currency from low single-digit growth.