Although revenues came in above Wall Street expectations, the Walgreens Boots Alliance third-quarter results finished short of an analyst consensus earnings estimate as the company continues adjusting to an environment where COVID-19 no longer has a major effect on customer purchasing while economic concerns weigh heavier.
Company net earnings in the quarter were $118 million, or 14 cents per diluted share, versus $289 million, or 33 cents per diluted share, in the year-before period, Walgreens reported. Adjusted for one-time events, company net earnings were $860 million, or $1 per diluted share, versus $834 billion, or 96 cents per diluted share, in the year before.
An analyst consensus estimate published by Yahoo Finance called for earnings per adjusted diluted share of $1.07 and revenues of $34.24 billion.
Third-quarter sales increased 8.6% year-over-year to $35.42 billion, and increased 8.9% on a constant currency basis, the company stated. Operating loss was $477 million versus an operating loss of $320 million in the year-earlier period, while adjusted operating income was $959 million versus $955 million.
Walgreens’ U.S. Retail Pharmacy segment retail sales were $27.87 billion versus $26.7 billion in the year-previous quarter, and comparable retail sales decreased 0.2% in the period. With tobacco sales excluded, comps increased 0.2%, led by strong results in the grocery, household and beauty categories, partly offset by a 90 basis point headwind from holiday season weakness with discretionary spending pullback and an 80 basis point headwind from lower sales of over-the-counter COVID test kits. Operating income for the segment was $395 million versus an operating loss of $90 million in the year-past quarter, while adjusted operating income was $962 million versus $966 million.
Walgreens CEO Rosalind Brewer said, “WBA achieved 8.9% constant currency sales growth in the third quarter despite a challenging operating environment. Consumers continue to appreciate the value, convenience, and range of services provided by Walgreens and Boots. However, significantly lower demand for COVID-related services, a more cautious and value-driven consumer, and a recently weaker respiratory season created margin pressures in the quarter. Our revised guidance takes an appropriately cautious forward view in light of consumer spending uncertainty, while still demonstrating clear drivers of a return to operating growth next fiscal year. We are raising our cost savings program target to $4.1 billion and taking immediate actions to optimize profitability for our U.S. Healthcare segment. I am confident that our turnaround strategy positions WBA to drive sustainable core growth and deliver long-term shareholder value.”
