Walgreens Boots Alliance (WBA 82.00, -0.50) is on track to begin lower by 0.6% after reporting in-line earnings on light revenue and reaffirming its guidance.
The convenience store/pharmacy operator delivered in-line second quarter earnings of $1.36 per share on a 2.4% year-over-year decline in revenue to $29.45 billion, which was a bit shy of market expectations. The company noted that when excluding the impact of leap year in 2016, sales grew 2.2% in constant currency.
Walgreens pointed out that it remains engaged with the Federal Trade Commission regarding its pending acquisition of Rite Aid (RAD 4.27, +0.06). The company remains hopeful in its ability to complete the acquisition by the end of July.
Retail pharmacy USA sales increased 1.5% year-over-year to $21.80 billion. Comparable store sales grew 2.4% while pharmacy comparable sales increased 4.2% due to higher volume. Comparable retail sales declined 0.8% year-over-year as lower consumables, general merchandise, and personal care sales offset growth in health & wellness and beauty.
Retail pharmacy international sales fell 14.5% year-over-year to $3.10 billion. Currency translations were largely responsible for the contraction, as sales on a constant currency basis declined 1.9%. Comparable store sales were down 0.9% while comparable pharmacy sales fell 3.7% on a constant currency basis. The drop was due to a negative impact of a reduction in pharmacy funding in the UK. Comparable retail sales grew 0.6% on a constant currency basis, indicating Boots brand growth in the UK, Republic of Ireland, and Thailand.
In addition to reporting earnings, the company noted that it achieved $1.50 billion in savings from its previously announced cost transformation program. The savings were achieved ahead of schedule.
Walgreens Boots Alliance's Board of Directors approved up to $1 billion in share buybacks before the end of 2017.
The company reaffirmed its guidance for the fiscal year, priming the market for earnings between $4.90 and $5.08 per share, which is close to current market expectations.