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Walgreens’ Top Line ahead of Its Fiscal 4Q17 Results

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What’s expected from WBA in fiscal 4Q17?

As noted in the previous article, Walgreens Boots Alliance (WBA) is scheduled to report its fiscal 4Q17[1. fiscal 4Q17 ended August 31, 2017] results on October 25. WBA is expected to report a 4.6% YoY (year-over-year) increase in total sales to $29.6 billion.

Walgreens Boots Alliance expects fiscal 4Q17 to be its best quarter this fiscal year in terms of sales growth. Walgreens recorded top-line growth of 3.2%, -2.4%, and 2.1%, respectively, during the first three quarters of fiscal 2017. Although WBA outpaced analysts’ expectations in the third quarter, it missed analyst sales forecasts during fiscal 1Q17 and 2Q17.

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Discussing WBA’s 9M17 top-line performance

During the first nine months of 2017 (or 9M17), Walgreens Boots Alliance’s total sales increased 0.9% YoY to $89.5 billion.

WBA’s Retail Pharmacy US segment, which generates more than 70% of its total sales, displayed decent growth. Revenues for the segment improved 3.1% YoY during 9M17. However, the Retail Pharmacy International and Wholesale Pharmacy International divisions recorded declining revenues.

Although the Retail Pharmacy segment’s 9M17 sales fell ~14%, its Wholesale Pharmacy segment’s revenues dropped 8.3% YoY. However, this decline was mostly driven by currency headwinds. When adjusted for forex fluctuations, the international numbers looked much better.

Comparing WBA with CVS

Walgreens Boots Alliance (WBA) posted total sales of $116.7 billion over the last 12 months (or LTM), down 0.5% YoY. In comparison, CVS Health’s LTM top line increased 8.3% year-over-year to $180.7 billion. However, WBA has a more significant international exposure compared to CVS, and the decline in its sales was mostly due to currency headwinds.

Investors looking for diversified exposure to WBA can invest in the VanEck Retail ETF (RTH), which holds 4.2% of its portfolio in WBA.

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