Walgreens maintains full-year profit growth forecast; shares rise

Walgreens Boots Alliance Inc said on Thursday it expects benefits from COVID-19 vaccinations to cushion the impact of pandemic-induced restrictions, and stuck to its full-year earnings growth forecast, sending its shares up 7%.

The drugstore chain has taken a number of steps to bolster profit after the health crisis hammered sales and forced it to cut jobs, shut some UK-based Boots stores and sell its distribution unit to AmerisourceBergen Corp for $6.5 billion.

Rival CVS Health Corp and Walgreens have an agreement with the federal government to vaccinate nursing home residents across the United States through a voluntary program.

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Walgreens said it expects to see some benefit from COVID-19 vaccinations in the second half of fiscal 2021.

“The administration of vaccinations to care homes is not a particularly profitable business,” Chief Executive Officer Stephano Pessina said.

“That being said, the vaccines will be accretive to the profile in the second half of the year. And that’s why... we did change the tone of our guidance.”

Walgreens maintained fiscal 2021 forecast of low single-digit growth in adjusted EPS, after it beat analysts’ estimates for adjusted first-quarter profit.

Same-store sales in Boots UK pharmacies rose 2.5% in the quarter, while Boots.com saw a 106% sales growth.

Walgreens expects significant growth in its UK business in the second half of the year from cost cuts. The company, however, cautioned that the lockdown in the UK could hurt its business.

“The big negative and the big question mark, and it’s the reason why we basically maintain guidance is, we actually have a lockdown in the U.K. right now that runs through the middle of February,” Chief Financial Officer James Kehoe said.