(Story updated at 12:50 p.m. ET.)
Walgreens Boots Alliance on Thursday announced increased sales for the third quarter ending May 31, largely as the result of its acquisition of Alliance Boots. It also officially named Stefano Pessina as CEO.
The Retail Pharmacy USA division of the alliance, whose principal retail pharmacy brands are Walgreens and Duane Reade, had third-quarter sales of $20.4 billion. Total sales in comparable drugstores (those open at least a year) increased 6.3%, compared with the same quarter a year ago. Retail sales in comparable drug stores increased 1.6% in the third quarter, with an increase in basket size partially offset by lower customer traffic compared with third-quarter 2014.
Pharmacy sales for the Deerfield, Ill.-based company, which accounted for 66.1% of division sales in the quarter, increased 7% compared with the year-ago quarter, while pharmacy sales in comparable stores increased 9.1%. The division filled 226 million prescriptions, including immunizations, on a 30-day adjusted basis in the quarter, an increase of 3.8% over last year's third quarter. For the quarter ending May 31, the division's retail prescription market share in the U.S. on a 30-day adjusted basis increased 20 basis points over a year ago to 19.3%, as reported by IMS Health.
The division opened or acquired 104 drugstores in the first nine months of fiscal 2015, including 34 relocations. It also closed 37 locations. The division operates 8,240 drugstores across all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands.
Net sales in the third quarter increased 48.4% to $28.8 billion, compared with the same quarter a year ago, largely because of the inclusion of Alliance Boots for the entire current quarter.
Walgreens Boots Alliance also announced that its board of directors has named Stephano Pessina as its permanent CEO, effective immediately. Pessina had served as acting CEO since January, and will continue reporting to Executive Chairman James Skinner.
“In Walgreens Boots Alliance's initial six months as a newly combined company, Stefano has done an extraordinary job leading the new enterprise, focusing our strategy while enhancing our financial performance,” Skinner said.
Overall, net sales in the first nine months of fiscal 2015 increased 30.7% to $74.9 billion, compared with the same period a year ago.
“In just six months since the strategic combination that formed Walgreens Boots Alliance, we are beginning to make progress in our operations, as we were able to deliver another strong quarter,” Pessina said in a press release.
The company also made headway on a $1.5 billion cost-savings program that was announced in April and expected to last through the end of fiscal 2017.
During the third quarter of fiscal 2015, the company reorganized Retail Pharmacy USA field operations and continued to optimize its corporate office. The company also closed nine of a planned 200 stores in the U.S., with approximately 70 to 80 additional closings planned by the end of the fiscal year.
Walgreens Boot Alliance also reduced Retail Pharmacy USA's information-technology cost structure to enable significant core system investments over the next several years, and announced a reduction of approximately 700 non-store-based roles in its Retail Pharmacy International division.
Actions taken in the quarter resulted in pre-tax charges of $160 million to the company's generally accepted accounting principles financial results in the quarter.
As for the company outlook, Walgreens Boots Alliance increased and narrowed its guidance for full-year fiscal 2015, adjusting net earnings attributable to the company to $3.70 to $3.80 per share on a diluted basis. The company also reaffirmed its goal of adjusted net earnings per diluted share of $4.25 to $4.60 for fiscal 2016.
