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May 31, 2020
Walgreens Q3 2020 Earnings Report
Financial performance was significantly impacted by the COVID-19 pandemic, but progress was accelerated on strategic priorities.
Key Takeaways
Walgreens Boots Alliance reported a challenging third quarter due to the COVID-19 pandemic, which significantly impacted sales and operating income. The company took actions to mitigate these impacts and accelerated investments in strategic priorities, increasing its annual cost savings target. While sales saw a slight increase, the company reported an operating loss due to impairment charges in Boots UK.
Sales increased 0.1 percent to $34.6 billion, up 1.2 percent on a constant currency basis.
Operating loss of $1.6 billion, compared to operating income of $1.2 billion a year ago, mainly due to the non-cash impairment charges of $2 billion in Boots UK.
Adjusted EPS decreased 43.8 percent from $1.47 to $0.83.
Company increased annual cost savings target from the Transformational Cost Management Program to in excess of $2.0 billion by fiscal 2022.
Walgreens
Walgreens
Walgreens Revenue by Segment
Revenue by Segment
U.S. Pharmacy Revenue
CapyFin.comInternational Revenue
CapyFin.com Forward Guidance
The company introduced fiscal 2020 adjusted EPS guidance of $4.65 to $4.75, including estimated adverse COVID-19 impacts of $1.03 to $1.14 per share. This guidance assumes continued adverse impacts from COVID-19 in the fourth quarter.
Positive Outlook
- More robust sales growth is expected in the Retail Pharmacy USA division.
- Company increased annual cost savings target from the Transformational Cost Management Program to in excess of $2.0 billion by fiscal 2022
- Company accelerated investments in strategic priorities, preparing for future growth
- The company is seeing encouraging response from customers to its digital marketing initiatives
- Walgreens total digitally initiated sales increased by 22.7 percent
Challenges Ahead
- Company introduced fiscal 2020 adjusted EPS guidance of $4.65 to $4.75, including estimated adverse COVID-19 impacts of $1.03 to $1.14 per share
- In the UK, retail conditions are expected to remain very depressed, despite gradual easing of restrictions.
- retail margins are expected to remain compressed in comparison to fiscal 2019.
- Operating loss of $1.6 billion, compared to operating income of $1.2 billion a year ago
- Adjusted EPS decreased 43.8 percent from $1.47 to $0.83
Revenue & Expenses
Visualization of income flow from segment revenue to net income