Like in the previous quarters, prescriptions transferred from Rite Aid stores and contributions from the revamped contract with Express Scripts will likely add to sales growth in retail pharmacy, the company’s main operating unit. Initial estimates indicate positive comparable store sales for the August-quarter. These factors might help the pharmacy segment in the US to achieve strong volume growth.
Challenges
It is estimated that the drug chain’s revised tobacco policy would weigh on overall performance this time, when compared to last year. Earlier this year, the management announced plans to impose curbs on tobacco sales in stores across the country. Also, the decline in store footfall due to the ongoing reorganization may have a negative impact on volumes.
Overseas Market
The overseas markets, meanwhile, paint a bleak picture, owing to pricing issues and the general weakness in retail markets, especially in Europe. This will be partially offset by the positive trend in the company’s wholesale business in emerging markets. Going forward, the general uptick in prescription volumes will contribute to sales growth, though there is no clarity with regard to the management’s strategy to revive growth.
Mixed Q3
For the third quarter, the company reported sales of about $35 billion, which was broadly unchanged from the year-ago period. Earnings, on an adjusted basis, dropped 4% annually to $1.47 per share. The results topped the Street view.
Also see: Walgreens Q3 2019 Earnings Conference Call Transcript
A few months ago, Walgreens shares plunged to a six-year low and maintained the downtrend since then. In the past twelve months, the stock lost about 29%, while the healthcare sector and the general market registered strong growth.
We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips