Walgreens Boots Alliance profits jump but UK sales dip

The US-based pharmacy retail group reported a 20.3% rise in its fourth-quarter adjusted net earnings to $1.16bn (£950m) in the three months to August 31, while sales were up 2.5% to $28.6bn (£23.3bn) on a constant currency basis.

The pharmacy retailer’s international division reported a 1% drop in like-for-like sales during the period, compounded by a 0.8% fall in its UK like-for-like sales.

Like-for-like sales across the retailer’s UK pharmacy division rose 0.6%.

Walgreens Boots Alliance recorded sales growth of 13.4% to $117.4bn (£81.6bn) during the 2016 fiscal year, bolstered by a 3.2% rise in like-for-like sales across its Walgreens US division in its fourth quarter, with overall sales in the region up 4% to $20.7bn (£16.9bn).

The retailer extended its merger deadline with US pharmacy chain Rite Aid, which it said will close early next year.

Executive vice chairman and chief executive Stefano Pessina said Walgreens Boots Alliance had “continued to make good progress in putting in place the building blocks for the future growth of the business” during its fourth quarter.

Neil Saunders, managing director of retail research agency Conlumino, said: “Given that Walgreens is still in the process of driving synergy savings from the Boots Alliance merger, we believe it will generate further profit uplifts well into the next fiscal year, even against a more challenging growth backdrop.

“It is inevitable, however, that the returns from cost savings and the streamlining of the business will diminish over time. And given that the prospects for a recovery in sterling look slim, the company will need to look to its domestic operation to drive future growth.”