Walgreens Sales Drop Off After Early Coronavirus Surge
April 02 2020 - 11:39AM
Dow Jones News
By Sharon Terlep and Micah Maidenberg
Pharmacy chain Walgreens Boots Alliance Inc. said U.S. store
sales fell sharply in the final week of March, offsetting gains
from an initial surge in demand as Americans rushed to stock up
amid the spread of coronavirus.
The drop-off could have broader implications for U.S. retailers
given that drugstores are among the few businesses permitted to
operate even in places with the tightest restrictions, and the
chain sells staples and medications in great demand amid the
pandemic.
Walgreens provided an update on the pandemic's impact on
business as it disclosed financial results for the quarter ended
Feb. 29, a period that preceded the start of widespread consumer
stockpiling of food and other goods.
"The full impact of Covid-19 won't be known for months,"
Walgreens finance chief James Kehoe said in a call with analysts,
referring to the disease caused by the virus. "The situation is
quite fluid and we expect volatility."
The Deerfield, Ill.-based chain generated stronger-than-expected
sales during its latest quarter. It reported $35.82 billion in
sales for the quarter ended Feb. 29, up from $34.53 billion a year
earlier. Operating income fell 19% to $1.2 billion, in part because
of reimbursement pressure on prescription drugs.
Earnings dropped to $946 million, or $1.07 a share, from $1.16
billion, or $1.24 a share, a year earlier. The company said it
earned an adjusted profit of $1.52 a share for the latest period, 6
cents more than analysts forecast.
In March, executives said, the end-of-month drop off was most
pronounced in communities where residents have been directed to
stay home. Sales of beauty products and so-called seasonal items
such as holiday decorations fell sharply, while sales rose for
health-related products and staples.
Walgreens, in the midst of a restructuring program, is diverting
funds intended to enable cost-cutting to instead manage the
coronavirus crisis. The company is paying bonuses to workers,
increasing home delivery and shortening store hours. In the U.K.,
where Walgreens operates the drugstore chain Boots, the company has
shut down most of its 600 optician centers.
Executives said the company is well-positioned to ride out the
pandemic, though uncertainty grows if mass lockdowns continue
beyond May. A planned share buyback program will proceed as
planned.
"We are confident this is a temporary situation," Mr. Kehoe
said.
Write to Sharon Terlep at sharon.terlep@wsj.com and Micah
Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
April 02, 2020 11:24 ET (15:24 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Walgreens Boots Alliance (NASDAQ:WBA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Walgreens Boots Alliance (NASDAQ:WBA)
Historical Stock Chart
From Apr 2023 to Apr 2024