DEERFIELD, Ill. -- Walgreens Boots Alliance Inc. said in announcing its first earnings results since the December 2014 combination of Walgreen Co. and Alliance Boots GmbH that it plans to close approximately 200 U.S. drug stores. Further, it said it will reorganize corporate and field operations, drive operating efficiencies and streamline information technology and other functions.
"This quarter marked a solid start for our new company, and I remain as optimistic as ever about our long-term future,” said executive vice chairman and acting CEO Stefano Pessina. “At the same time, we understand the work that is needed to proactively address headwinds such as reimbursement pressure and competition.”
He continued, “We will be refreshing and reinvesting in the stores of our Retail Pharmacy USA division to improve the customer experience and expand retail margins. Third, we are restructuring our cost base, with a focus primarily in the USA, to create a more efficient cost model and become a more agile company.”
The company previously announced in August 2014 a three-year, $1 billion cost-reduction initiative and committed to providing additional information in subsequent quarters. After further analysis, the company has identified additional opportunities for cost savings, primarily in its Retail Pharmacy USA division. These additional opportunities will increase the total expected cost savings program by $500 million to a projected $1.5 billion by the end of fiscal 2017.
The Retail Pharmacy USA division, whose principal retail pharmacy brands are Walgreens and Duane Reade, had second quarter sales of $21 billion, an increase of 7.4% over the year-ago quarter. Total sales in comparable stores (those open at least a year) increased 6.9% compared with the same quarter a year ago. Retail comparable store sales increased 2.5% in the second quarter with improved retail product margins compared with last year's second quarter.
The division, based in Deerfield, Ill., opened 71 new drugstores in the first half of fiscal 2015, including 25 relocations, and closed 46 locations. As of Feb. 28, 2015, the division operated 8,232 drug stores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Walgreens Boots calls itself “the first global pharmacy-led, health and wellbeing enterprise in the world.” The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints and a heritage of health care services through pharmaceutical wholesaling and community pharmacy care.
The company employs more than 370,000 people and has a presence in more than 25 countries; it is the largest retail pharmacy, health and daily living destination in the United States and Europe. Including its equity method investments, Walgreens Boots Alliance is the global leader in pharmacy-led, health and wellbeing retail with more than 13,100 stores in 11 countries. The company includes the largest global pharmaceutical wholesale and distribution network with more than 350 distribution centers delivering to more than 200,000 pharmacies, doctors, health centers and hospitals each year in 19 countries. It is also the world's largest purchaser of prescription drugs and many other health and wellbeing products. Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7, Botanics and Soap & Glory.
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