Q2 sales for Walgreens U.S. division up 2.1% despite soft flu season
DEERFIELD, Ill. — Walgreens Boots Alliance on Tuesday announced an increase of 13.6% in net sales to $30.2 billion for the second quarter ended Feb. 29 compared with the same quarter a year ago, largely due to the full consolidation of Alliance Boots for the entire quarter this year, while foreign currency translation adversely impacted sales by approximately $750 million or 2.4%.
“I am pleased with how we are working across the company to transform our businesses and position ourselves for success in rapidly changing markets," stated Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO. "In addition, we continued to make good progress in the quarter in reducing costs and establishing more efficient working practices, which contributed to overall adjusted earnings growth," he said. "Looking ahead, we remain on track to achieve our expectations for this fiscal year, as we work to mitigate lower pharmacy reimbursement rates and challenging retail sales environments.”
The Retail Pharmacy USA division, whose principal retail pharmacy brands are Walgreens and Duane Reade, had second quarter total sales of $21.5 billion, an increase of 2.1% over the year-ago quarter. Sales in comparable stores increased 2.2% compared with the same quarter a year ago.
Pharmacy sales, which accounted for 65% of the division’s total sales in the quarter, increased 3.2% compared with the year-ago quarter, while comparable pharmacy sales increased 3.7%. The division filled 233 million prescriptions (including immunizations) adjusted to 30-day equivalents in the quarter, an increase of 3.9% over last year’s second quarter, while the reported incidence of flu across the U.S. declined approximately 16% compared with the year-ago quarter, according to IMS Health.
Prescriptions filled in comparable stores increased 2.8% compared with the same quarter last year, driven by growth in Medicare Part D prescriptions, while a weak cough, cold and flu season had a negative impact of approximately 30 basis points. The division’s retail prescription market share on a 30-day adjusted basis in the second quarter increased approximately 20 basis points over the year-ago quarter to 19.5%, as reported by IMS Health.
Comparable retail sales decreased 0.3% in the second quarter primarily due to soft cough, cold and flu product sales, which had an estimated negative impact of approximately 100 basis points on comparable retail sales in the quarter. The division saw strong sales in giftable products during the holiday season while wellness products, such as vitamins and first aid, and the company’s product brands, such as No7, also performed well in the quarter.
Net sales for the six months ended Feb. 29 increased 28.4% to $59.2 billion compared with the same period a year ago.
Walgreens Boots Alliance’s proposed acquisition of Rite Aid Corporation, which was announced Oct. 27, 2015, is progressing as planned with Rite Aid’s stockholders approving the transaction on Feb. 4, 2016.
Walgreens Boots Alliance is continuing its integration planning and continues to expect the transaction to close in the second half of calendar 2016.
The Retail Pharmacy International division, whose principal retail brands are Boots in the U.K., Thailand, Norway, the Republic of Ireland and The Netherlands, Benavides in Mexico and Ahumada in Chile, had second quarter total sales of $3.7 billion. On a pro forma constant currency basis, comparable store sales in the second quarter increased 2.3% compared with the same period a year ago, led by growth in the U.K. and by strong growth in the Republic of Ireland.
Comparable pharmacy sales increased 2.6% in the second quarter compared with last year’s second quarter, driven by good growth in the U.K.
Comparable retail sales increased 2.1% in the quarter compared with the same period a year ago, driven by Boots in the U.K. and the Republic of Ireland. Boots U.K. growth reflects strong performances for its “Order & Collect service” and for seasonal categories and the company’s product brands.
The Pharmaceutical Wholesale division, which mainly operates under the Alliance Healthcare brand, had second quarter total sales of $5.6 billion. Comparable sales increased 1.6% compared with the same period a year ago. Sales growth in the quarter was in line with the company’s estimate of market growth, weighted on the basis of country wholesale sales.