WBA in the UK: What Happened Internationally in Fiscal 2Q17



Currency headwinds impact WBA yet again

Walgreens Boots Alliance’s (WBA) top line was negatively impacted by currency headwinds in fiscal 2Q17, and the Retail Pharmacy International and Pharmaceutical Wholesale divisions bore the brunt of these unfavorable exchange rates. Notably, Walgreens had acquired these two businesses as a part of its Alliance Boots transactions in 2015.

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Retail Pharmacy International

WBA’s Retail Pharmacy International segment’s sales fell 14.5% YoY (year-over-year) to $3.1 billion, primarily due to currency headwinds and weakness in pharmacy sales in the UK. Excluding the negative impact of currency, sales fell 1.9%.

But sales in this division have been in the red for the past four quarters, with the decline worsening each quarter. The company has cited a weakness in the UK and currency headwinds as the biggest reasons behind these declining sales.

Specifically, comparable store sales fell 0.9%, and the 0.6% rise in retail comps were offset by a 3.7% drop in pharmacy comps. As in the last couple of quarters, pharmacy comps were negatively impacted by reductions in the UK government’s pharmacy funding. Retail comps, on the other hand, got a boost from growth in the Boots business in the UK, Ireland, and Thailand.

Pharmaceutical Wholesale

Pharmaceutical Wholesale sales fell 10.6% YoY to $5.0 billion. On a constant currency basis, sales rose 0.6%. Sales comps stood at 5.2%, falling short of the company’s expectations.

“Growth was held back by the sale of Alliance Healthcare Russia in March last year and also by the leap year,” explained George Fairweather, Executive Vice President of Walgreens.

ETF investors seeking to add exposure to WBA can consider the VanEck Retail ETF (RTH), which invests 4.7% of its portfolio in WBA.

Continue to the next part for a closer look at WBA’s Rite Aid deal.


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