Walgreens Boots Alliance suffered a 74 percent drop in net earnings in its third quarter, driven by the opioid settlement with the State of Florida and lower vaccinations, but beat Wall Street forecasts.
The company reported that net earnings from continuing operations decreased $289 million compared with $1.2 billion in the same period a year earlier. Earnings per share decreased to 33 cents, compared with $1.38 in the third quarter of 2021. On an adjusted basis, earnings per share were 96 cents, beating analysts’ expectations of 92 cents per share.
Third-quarter sales from continuing operations decreased 4.2 percent to $32.6 billion.
Walgreens reported a $683 million charge related to its opioid settlement with the State of Florida in the current quarter to resolve all claims related to the distribution and dispensing of prescription opioid medications across its pharmacies in the state.
In the U.K., Boots’ comparable sales grew 24 percent, reflecting somewhat of a recovery in footfall, although store footfall in the quarter remains around 20 percent below pre-Covid levels.
Earlier this week, the company revealed that it had shelved plans to sell Boots and its No7 beauty brand after no third party was able to make an offer that “adequately reflects the high potential value” of the business amid the macroeconomic environment and mounting speculation that the U.S. will fall into a recession.
“We gained early high interest at the very beginning of these discussions back in January. We started off with roughly about 8 to 10 interested parties in the Boots business. And we had very productive discussions, got into a detailed due diligence just as the market began to turn on us, and such an unexpected and dramatic change,” chief executive officer Rosalind Brewer explained in phone call with analysts. “So as a result, we made this decision to slow this opportunity down. But at the same time, the Boots and No7 business continue to do well. And our thinking is in any of these situations, the business should be good enough for us to retain as well as to look at strategic opportunities for it. So the business is healthy, and we’ll continue to ensure that it remains healthy.”
It had been widely reported that India’s Reliance Industries and U.S. private equity investor Apollo Global Management made a joint offer for Boots, which operates more than 2,200 stores, valuing it at between $5 billion and $6 billion.
Of its future plans for the British drugstore, Sebastian James, managing director of Boots U.K. and ROI, said: “The execution of our transformation program and a sharp focus on expanding our key categories of health care and beauty, has driven strong sales and market share growth and further strengthened our position as the U.K.’s leading health and beauty retailer. Significant investment in both our digital platforms and in our stores is expected to drive continued market leading growth.”
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