Walgreens Grows Sales by Over 5%

By Bruce Harpham Tuesday, January 12, 2021

The Walgreens Boots Alliance (stock ticker: Nasdaq: WBA) grew business sales significantly by 5% in the quarter ending on November 30, 2020. The drug store chain operates locations in the US, UK, and other countries. The growth in sales has inspired investor confidence. Walgreens shares drove the stock up nearly 5% to $45 — up from $40 at the beginning of 2021.

Key Numbers from Walgreens Earnings

  • Profitability Falls: The company reported a loss of $220 million in the quarter. That’s a sharp fall from the same period of 2019 when the company reported more than $1.4 billion in profit.
  • Growing Online Sales: Boots.com, the company’s UK brand, had increased online sales by more than 100% in 2020. However, in-person shopping activity in the UK has continued to fall due to the COVID-19 pandemic.
  • Earnings From COVID-19: Walgreens has increased earnings directly from COVID-19. The company has administered over 2.8 million COVID-19 tests. Furthermore, Walgreens will be administering COVID-19 vaccines in the US at long term care facilities. Offering such tests will help the company maintain its status as an essential destination.
  • Long-Term Cost Cutting Program: The company’s return to profitability doesn’t depend on business sales alone. Walgreens plans to achieve annual savings of over $2 billion by 2022 as its Transformational Cost Management Program continues to unfold. The program includes reducing the UK workforce by 11% and implementing outsourcing with Genpact.
  • Shifting Demand: Walgreens has lost revenue as demand for beauty products falls more than 10% in the US and UK. However, the company has made up for some of the lost revenue by selling personal protective equipment (PPE).

Walgreens Bids Farewell to Wholesale

Walgreens is doubling down on its consumer business. The company has decided to exit the pharmaceutical wholesale business, which is a significant strategic move because that division has generated billions of dollars in revenue. However, the division also reported a loss due to investment losses.

In terms of its consumer focus, Walgreens plans to open 600 to 700 Village Medical locations in the US over the next four years. As a result, Walgreens locations will start to have physicians and pharmacists located in the same place. Adding additional health services at its retail locations will help the company compete against online prescription fulfillment services like Blink Health and Honeybee Health.

COVID-19 to Have Mixed Impact on the Business

There are some concerns that the new lockdown measures in 2021, especially in the UK, may hurt sales further. The company has more than two thousand stores under the Boots brand in the UK. Some Boots services like optician and hearing services are challenging to deliver remotely. Additionally, Walgreens management expects that the revenue earned from COVID-19 vaccinations will offset other revenue losses in 2021.

About the Author

Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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