Walgreens promises return to profit growth as COVID-19 impact eases

Walgreens, whose 2020 adjusted profit fell 21%, has cut jobs, suspended share repurchases and closed some of its UK-based Boots stores to save costs and revive profit growth, as shoppers stayed indoors due to the COVID-19 pandemic.

Thursday’s full-year results showed sales at Boots were down by a third in the final quarter of financial 2020, although that was improved from a 48% slump a quarter earlier.

“We are seeing gradual improvement in key U.S. and UK markets and continued strong performance in our wholesale business,” Walgreens CEO Stefano Pessina said in a statement.

The company said it expects adjusted profit for fiscal 2021 to grow in single-digit at constant currency rates. Analysts expected growth of about 1%, according to Refinitiv data.

It forecast strong adjusted profit growth in the second half of 2021, as the impact of the COVID-19 pandemic subsides, and supported by its cost-cutting plans, and investments in 2021.

Walgreens shares rose 1.7% before the opening bell on Thursday, but were still down nearly 40% in the year. The stock is one of the worst performers on the bluechip Dow Jones index <.DJI.>.

In the quarter ended Aug. 31, online sales more than doubled at Boots.com while sales at Walgreen.com rose nearly 40%. Same-store sales at the company’s retail pharmacy division in the United States rose 3.6% from a year earlier.

Walgreens, like rival CVS Health, has been providing COVID-19 tests during the pandemic and has increased testing capacity to 500,000 per month. The company said its test results generally take one to three days to arrive.

Excluding items, Walgreens earned $1.02 per share, beating analysts’ expectations of 96 cents per share.

(Reporting By Manas Mishra and Mrinalika Roy in Bengaluru; Editing by Vinay Dwivedi and Patrick Graham)

By Mrinalika Roy and Manas Mishra

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