Boots saw a significant recovery in sales during its last quarter as the easing of Covid-19 restrictions boosted footfall at its stores on high streets.
Third-quarter results (to 31 May) from Walgreens Boots Alliance (WBA) show its operation in the UK saw like-for-like retail sales surge up 38.7% year-on-year. This follows declines of 17.9% and 9.1% in the previous two quarters. However, the group highlighted that its stores in travel locations such as airports and train stations continued to struggle.
Boots e-commerce operation also continued to perform well, with sales growth of 42.3%. However, this was down from the 105% increase in last quarter as consumers started to return to stores.
Meanwhile, UK pharmacy sales increased 3.7%, reflecting stronger pharmacy services and favourable timing of NHS reimbursement, partially offset by lower prescription volumes.
Recently filed accounts for Boots UK showed the business slipped into the red during 2020 amid the tough trading conditions. The business has been undergoing an overhaul of its store estate and product offering to win back shoppers from supermarkets and online rivals.
Overall, WBA’s International division saw third-quarter sales climb 58.7% on a constant currency basis to $5.3bn. This included the impact of the company’s wholesale joint venture with McKesson in Germany, which was consolidated in November last year. Adjusted operating profit was $94m, an increase of $222m compared with the year-ago quarter, reflecting the less severe Covid-19 restrictions in the UK, the strong online performance, and cost management actions.
The wider WBA group recorded an operating profit from continuing operations of $1.1bn, compared with a loss of $1.7bn a year ago. Total sales increased 10.4% on a constant currency basis to $34.0bn, driven by the improvements in the International division, the JV in Germany, and solid growth in its main US retail unit where like-for-like sales increased 6.4%.
“This quarter’s results demonstrate continued momentum, and while challenges lie ahead, we are in a strong position to grow and innovate our core retail and pharmacy businesses for the future,” said WBA Chief Executive Rosalind Brewer.
“We are accelerating our investments to advance our operational excellence, including technology innovations that support mass personalisation, pharmacy of the future and the next phase of growth in tech-enabled healthcare. These investments are fueled by our Alliance Healthcare divestiture.”
NAM Implications:
- Key is how your Boots sales compared with these stats.
- Also requires a guess on how your rivals fared.
- Meanwhile, Boots UK results will have to be squared in Wall Street…
- …given activist shareholders hovering.
- So anticipate some cost-cutting moves…
- …to complement sales-driving initiatives.
