Walgreens Boots Alliance, the parent company of the Walgreen Company, reported better than expected earnings this week. The Illinois-based firm reported its fiscal third-quarter earnings, which beat initial analysts' forecast.
The company's higher than expected earnings was apparently aided by higher prescription drugs sales over the last quarter. According to the firm's CEO Stefano Pessina, the numbers were quite a welcome sight given that the last quarter was "the most difficult" quarter the company had ever gone through. Walgreens operated the US' second-largest drugstore chain, right behind CVS Health.
In its latest earnings call, the company report adjusted earnings of $1.47 per share. This was slightly higher than analysts' expected earnings of $1.42 per share. The biggest contributor to the higher earnings was the company's drugstore sales, which had reached around $34.69 billion. This was also slightly higher than the initial analyst's forecast of $34.46 billion.
Following the release of the company's earnings, Walgreens stock prices rose by as much as 4 percent. This was a slight relief for the stock given that it has so far dropped by 21 percent since the start of the year.
Pessina mentioned during the company's earnings call that he was very proud to be reported such numbers given that the previous quarter's earnings were very disappointing for everyone involved. Despite the uptick, Pessina cautioned that there were still a lot of things to do to further improve the company's performance. The executive stated that he aims to return the company to its once consistent and strong rate of growth.
The company reported a total third-quarter net income of $1.03 billion. While this was significantly higher than the amount gained in the previous quarter, it is still 12 percent lower than what the company had reported in the same quarter for the previous year.
According to the company's chief financial officer, James Kehoe, the decrease in profits can be attributed to overall lower pharmacy margins. The company has also experienced some weakness in its UK drugstore business as well as a slight decline in front-store sales. The current political climate has apparently also increased pressures place on US health insurers, which has, in turn, lowered the amounts they were willing to pay to fill up prescriptions.
In light of its slowing UK business, Walgreens had announced that it will be closing down 200 of its Boots drugstores in the country. While there are no plans yet of closing any of its US stores, Kehoe revealed that they are now actively studying that possibility.
