Boots owner WBA sales rise but "performance does not reflect strong assets"

Walgreens Boots Alliance has reported a 4.8% increase in annual sales to £113 billion ($139.1 billion), helped by online sales at Boots. 

The group saw sales rise 9.2% to £28.7 billion ($35.4 billion) in the fourth quarter ending 31 August 2023, reflecting growth across its US retail pharmacy and international segments.

The international segment shared fourth quarter sales of £4.7 billion ($5.8 billion), an increase of 12.4% from the year-ago quarter.

Sales at Boots grew 10.9%, with comparable pharmacy sales up 9.9% and comparable retail sales up 11.7% - reflecting growth across all categories, with footfall improving 4%.

Online sales at Boots continued to perform "strongly", growing 28.9% and representing over 13% of the retailer's total sales.

Seb James, Managing Director at Boots, said: "I am really encouraged to see continued strong performance as the work that we have done to expand our ranges, drive value and innovate in beauty seems to be resonating extremely well with customers."

Adjusted operating income for the international segment lifted 59% to £210 million ($259 million), led by "strong" retail sales in the UK.

However, WBA's total adjusted operating income dropped 9.8% to £555 million ($683 million) in the fourth quarter. It also reported a net loss of £146 million ($180 million).

Ginger Graham, Interim CEO at WBA, said: "Our performance this year has not reflected WBA’s strong assets, brand legacy, or our commitment to our customers and patients.

"In just six weeks, we have taken a number of steps to align our cost structure with our business performance, including planned cost reductions of at least $1 billion, and lowered capital expenditures by approximately $600 million. We anticipate seeing the impact of these actions in FY24, beginning in the second quarter.

"As we welcome our new Chief Executive Officer who brings deep healthcare experience and the skills needed to propel WBA forward, along with the support of the board, I am confident in our company's future and the ability to deliver greater value to our customers, shareholders, partners, and employees."

WBA announced the appointment of Tim Wentworth as its new CEO yesterday, replacing Rosalind Brewer, who stepped down last month after more than two years in the role.

Effective 23 October, Wentworth will also join the WBA Board of Directors upon assuming the role.