Walgreens Boots Alliance profits jump despite Boots sales drop

The health and beauty conglomerate recorded a 34% spike in GAAP (generally accepted accounting principles) operating income year on year to $2bn (£1.4bn) in the quarter to February 28, driven by a 12% rise in sales to $33bn (£23.3bn).

The retail group also lifted its full-year adjusted earnings forecast to between $5.85 and $6.05 per share from $5.45 to $5.70 per share, which it attributed to benefits from changes in the US tax code.

Despite the group’s overall strong performance, its international divisions suffered during the period as like-for-like retail sales fell 2.8% in constant currency terms, which the firm largely attributed to Boots.

Overall international like-for-like sales declined 1.7% year on year, although like-for-like pharmacy sales edged up 0.6%.

Walgreens Boots Alliance’s US division posted a 12% jump in sales during the period to $24.5bn (£17.3bn), up 2.4% in like-for-like terms.

Pharmacy sales, which comprise 70% of the group’s total US sales in the quarter, rose 18.7% overall and increased 5.1% on a like-for-like basis.

However, US retail sales dipped 0.7% overall and were down 2.7% in like-for-likes.

Chief executive and executive vice-chairman Stefano Pessina said: “Our growth strategy of increasing and consolidating volume, differentiating ourselves through value and quality of service, and controlling costs is bearing fruit across our businesses.

“This is reflected in another good set of financial results in which we delivered the highest sales growth in eight quarters, as well as strong cash generation and record US pharmacy market share.

“We expect to continue to grow, in part through the recent acquisition of stores from Rite Aid, and today we are raising our fiscal 2018 guidance.”