Walgreens Boots Alliance beat analysts' lowered expectations for first-quarter adjusted profit and indicated that its restructuring was taking hold.
The company has announced thousands of store closures, a $1 billion (€970 million) cost-cutting programme, and is exploring options for its non-core businesses as CEO Tim Wentworth seeks to kick-start growth and stem a sharp drop in its share price.
"Our turnaround will take time, but as today's results demonstrate, we are executing with urgency," Wentworth told analysts in a post-earnings conference call.
Closely watched metrics such as same-store sales at its retained outlets were outperforming those slated to close at the end of the year, the company said.
Excluding items, Walgreens reported earnings of 51 cents per share in the first quarter, compared with analysts' average estimate of 37 cents, according to data compiled by LSEG.
The quarterly performance was better than expected, but the number of moving parts in the broader story remains numerous and unchanged, said Leerink Partners analyst Michael Cherny.
Drug Pricing
Walgreens, which operates the second-largest pharmacy chain in the US, is also working to simplify drug pricing at its stores, executives said.
Rival CVS has said all commercial prescriptions dispensed at its pharmacies this year will be reimbursed by the cost of the drug plus a fixed markup and fees.
Wentworth said the company was working on similar arrangements in its contract negotiations with pharmacy benefit managers.
Investors fled Walgreens as its profits came under pressure from persistently low drug reimbursement rates and consumers avoiding high-priced grocery items.
The company was looking to sell itself to private equity firm Sycamore Partners and had also reached out to other potential buyers, according to media outlets. The company has declined to comment on the reports.
Quarterly Highlights
Walgreens' total sales of $39.46 billion (€38.4 billion) also beat expectations of $37.36 billion (€36.4 billion). Sales in its US retail pharmacy unit also surpassed estimates.
The company's international segment generated sales worth $6.4 billion (€6.2 billion) during the quarter, reflecting an increase of 10.2% year on year.
Sales increased 6.5% on a constant currency basis, with the Germany wholesale business growing 11.3% and Boots UK sales growing 4.5%, it noted.
Boots UK comparable pharmacy sales increased 10.9% compared with the year-ago quarter, while comparable retail sales increased 8.1%.
The online segment, Boots.com reported sales growth of 30%, (23% on a constant currency basis), boosted by strong Black Friday performance.
Additional reporting by ESM.
