Walgreens Falls Short On Q4 Revenues Amid Banner Year For Prescriptions
Amid a banner year for prescriptions along with a rise in refills from digital channels, Walgreens Boots Alliance beat earnings expectations, but fell short on top-line estimates. The pharmacy chain reported earnings per share of $1.48 and revenues of $33.4 billion compared to estimates of $1.45 and $33.8 billion, respectively. Shares had initially fallen during pre-market trading, but the stock recovered over the morning and was down approximately 1 percent as of 3:31 p.m. on Thursday (Oct. 11).
In a conference call with analysts, Walgreens Boots Alliance Co-Chief Operating Officer Alexander Gourlay noted that its pharmacy business has exhibited a particularly strong performance: “In the last year, we filled the highest number of prescriptions in Walgreens history,” Gourlay said. And, in the fourth quarter, he said the company had nearly a quarter – or a 22.3 percent share – of the U.S. retail prescription market. He also noted that 22.5 percent of retail refill scripts for the company have been initiated through digital channels in the quarter, which marks an increase of 2.4 percent points over the same quarter last year.
When it comes to innovation, Gourlay said the company has expanded its trial of express pick-up points for its pharmacy in-store. And the company plans to soon expand its mobile self-checkout, which allows customers to scan merchandise and pay using an app in the store, beyond its test in Gainesville, Florida. Additionally, Gourlay noted that the company outfitted its first store outside of the city with a new offering: That concept, which is located near the company’s Deerfield, Illinois headquarters is characterized as a “neighborhood health destination store,” Gourlay said.
Partnerships and Collaborations
Throughout its store network, Walgreens is also working to complete the FedEx offering that is now in around 7,700 stores. (In January of last year, it was announced that FedEx will bring pick-up and drop-off services to thousands of Walgreens store locations across the U.S.) At the same time, the retailer is expanding its trial with Sprint to 80 additional locations that are scheduled to open before year’s end in Illinois and Texas.
In addition, Gourlay noted the company’s partnership with Kroger: The companies recently announced that are teaming up for an experimental program that will allow shoppers to pick up their supermarket orders at 13 of the pharmacy’s brick-and-mortar locations. Gourlay said the retailer’s work with Kroger combines Walgreens’ pharmacy, health, beauty and personal care expertise with the grocer’s extensive skills and resources in general retail and merchandise. While he noted that the offering is an early-stage trial phase, “this is the type of initiative that could drive a step change in the transformation of our customer offer and our stores overall,” Gourlay said.
Gourlay also noted the company’s collaboration with beauty subscription service Birchbox for an in-store offering, along with integrated access to the company through Walgreens’ website and app. That work, he said, showed a drive to develop beauty offerings in the U.S. and abroad alongside pharmacy, healthcare and personal care. In terms of the company’s partnership with LabCorp, he noted that Walgreens is planning to open at least 600 patient service centers over the next four years. (He said the company has already opened 17 locations since June of last year.) Gourlay noted “so far, we’ve been delighted with the customer response to this partnership,” showing that customers may be taking to the retailer’s new and expanded collaborations and partnerships.