WBA lifted by Rite Aid
This article was originally published in OTC Bulletin & The Rose Sheet
Executive Summary
Acquiring a group of Rite Aid stores at the end of 2018 helped Walgreens Boots Alliance (WBA) post a 12.1% rise in sales to US$33.0 billion (€26.7 billion) in its second quarter ended 28 February 2018. At constant currencies, sales advanced by 9.4%.
Acquiring a group of Rite Aid stores at the end of 2018 helped Walgreens Boots Alliance (WBA) post a 12.1% rise in sales to US$33.0 billion (€26.7 billion) in its second quarter ended 28 February 2018. At constant currencies, sales advanced by 9.4%.
Having acquired 357 Rite Aid stores as of 31 December 2017, turnover at WBA’s Retail Pharmacy USA division advanced by 12.2% to US$24.5 billion in the quarter. Prescription sales, which accounted for 70.3% of the total, had increased by 18.7%, WBA noted, while prescription sales in comparable stores had improved by 5.1%.
WBA secured regulatory approval to acquire less than half of Rite Aid’s 4,624 stores, after amending the deal for a third time to satisfy competition concerns (OTC bulletin, 6 October 2017, page 7).
The revised US$4.38 billion agreement will see the wholesale and retail giant acquire 1,932 Rite Aid stores – located primarily in the North-Eastern and Southern US – along with three distribution centres and related inventory.
Once the deal closes in spring 2018, WBA will launch a US$450 million store optimisation programme in the country (OTC bulletin, 3 November 2017, page 8).
As part of this programme, the firm said it expected to close “approximately 600 stores”.
By late 2020, WBA expects to spend around US$750 million in integrating the acquired Rite Aid drugstores, three distribution centres and related assets. Another US$500 million of capital expenditure will be devoted to store conversions, offset by more than US$300 million in anticipated annual synergies “derived primarily from procurement, cost savings and other operational matters”.
Outside the US, WBA reported turnover at its Retail Pharmacy International business – consisting of health and beauty chains in eight countries, the largest of which is Boots UK – up by 7.0% to US$3.3 billion in the three months, thanks entirely to positive currency effects. At constant currencies, sales actually declined by 2.6%.
WBA’s global Pharmaceutical Wholesale business – which mainly operates under the Alliance Healthcare brand – reported second-quarter sales up by 14.4% to US$5.8 billion. At constant currencies, the rise was a more modest 3.4%.