Walgreens to Cut 4,000 Jobs in U.K. Boots Stores, Suspend Buybacks -- Update
July 09 2020 - 10:17AM
Dow Jones News
By Micah Maidenberg and Sharon Terlep
Walgreens Boots Alliance Inc. said it plans to cut about 4,000
jobs in the U.K. and suspend stock buybacks as demand fell off in
its international business during the drugstore chain's latest
quarter.
The pharmacy chain on Thursday said the coronavirus pandemic
sliced out around $700 million to $750 million in sales for its
quarter that ended May 31, with most of the impact tied to its
retail pharmacy business overseas.
A "dramatic reduction" in customer traffic, including an 85%
decline in April, weighed on demand for its Boots U.K. stores,
Walgreens said. The company said it recorded noncash impairment
charges of $2 billion tied to the Boots U.K. unit.
The job cuts in the U.K. will impact about 7% of its workforce
there, and will include shuttering 48 Boots opticians and a 20%
headcount reductions in the company's U.K. support offices.
Foot traffic "ground to a virtual halt," in Walgreen's U.K.'s
Boots business, which includes beauty-products retailers and
eyecare centers as well as pharmacies, Walgreens Finance Chief
James Kehoe said.
Overall, Walgreens swung to a loss of $1.71 billion, or $1.95 a
share, for its latest quarter, compared with a year-earlier profit
of $1.03 billion, or $1.13 a share. Its adjusted profit fell to 83
cents a share and was short of expectations.
The company generated $34.6 billion in sales, roughly flat year
over year. Analysts polled by FactSet predicted $34.3 billion in
sales for the latest period.
In the U.S. retail unit, sales rose about 3% from a year earlier
to $27.4 billion for the latest quarter. Pharmacy sales were up
4.6%, while prescriptions filled in the third quarter decreased
1.3%.
The Covid-19 pandemic has been challenging for drugstores, as
patients put off visiting doctors and other health providers.
Walgreens is part of a coalition of health-focused companies that
is paying for advertisements that encourage people to return to
their medical providers.
"Globally, pharmacy volume was impacted by a drop in doctor
visits and hospital patient admissions," the company said.
Walgreens is working with and investing in primary-care provider
VillageMD to open 500 to 700 doctors' offices in its
drugstores.
Rival CVS Health Corp. is developing so-called health-care hubs
in its stores, offering a range of medical services. Walmart Inc.
is also adding clinics to its locations.
Write to Micah Maidenberg at micah.maidenberg@wsj.com and Sharon
Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
July 09, 2020 10:02 ET (14:02 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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