Walgreens Beats Analyst Expectations for Profit, but Retail Sales Slow
Walgreens Boots Alliance (WBA), which is in the process of being acquired by private equity firm Sycamore Partners, posted a better-than-expected overall third quarter, but one marked by a slowdown in retail sales.
The global organization shared that it was able to beat expectations through cost reductions and an ongoing focus on closing underperforming stores. For the quarter ended May 31, sales grew 7.2% on a year-over-year (YoY) basis to top $39 billion, while earnings per share dipped by $0.20. The sales results exceeded Wall Street projections for $36.8 billion in revenue.
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That said, it was a mixed bag when it came to Q3 sales. Pharmacy sales in the U.S. jumped 11.8% YoY, but retail sales in this country dropped 5.3% during that timeframe. The slide in retail, which included a 2.4% decline in comps, was attributed to a slowdown in grocery, household and health, wellness, and beauty categories.
CEO Tim Wentworth, who has been trying to steer a rebound as the company gets ready to go private, recapped the performance. “Third quarter results reflect continued improvement in our U.S. Healthcare segment and benefits from our cost savings initiatives, while we continued to see weakness in our U.S. front-end sales,” he said. “We remain focused on our turnaround plan, which will require time, disciplined focus and a balanced approach to manage future cash needs with investments necessary to navigate an evolving pharmacy and retail environment.”
Walgreens is addressing the challenging retail sales environment by focusing on value. Earlier in June, the company rolled out a series of deals, including discounts up to 25% on snack and beverage essentials and 25% on select summer gathering essentials.
“We know our customers are looking for ways to make their time and money go further this summer,” said Tracey D. Brown, EVP, president, retail and chief customer officer. “From compelling deals on summer must haves to everyday value across our assortment, and convenient ways to shop, we’re making it easier for families to get what they want and need. Whether choosing our trusted national brands or our high-quality owned brand offerings, Walgreens customers can count on great value without compromising on quality or convenience.”
The $10 billion sale Sycamore Partners is expected to close later this year.
Deerfield, Ill.-based Walgreens currently operates nearly 9,000 retail locations across the United States, Puerto Rico and the U.S. Virgin Islands. The company is No. 6 on The PG 100, Progressive Grocer’s 2025 list of the top food and consumables retailers in North America.
