Boots shifts focus on US market despite $3.1bn net loss

Walgreens Boots Alliance has announced the intention to reduce capital expenditures to ‘align’ cost structure with business performance

WBA, Boots' parent company, revealed the results for its fourth quarter of the financial year, showing three months to August 2023.

The reports published on 12 October show the loss of at least $1bn following a net loss of $3.1bn on an annual basis. This marks a decrease compared to a profit of $4.3bn in the previous financial year.

The loss was attributed in part to a $5.5 billion after-tax charge related to opioid claims and litigation during the period, as well as the comparison against a $2.5 billion after-tax gain from the company's investments in Village MD and Shields Health Solutions in the same period last year.

Ginger Graham, WBA’s Interim Chief Executive spoke about the company’s performance and its dedication to their customers and patients.

“In just six weeks, we have taken a number of steps to align our cost structure with our business performance, including planned cost reductions of at least $1bn, and lowered capital expenditures by approximately $600m.

“We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter. We are also intently focused on accelerating our profitability in the US healthcare segment,” said Graham.

The UK’s health and beauty retailer has made a $1bn (£820m) cost cut despite a UK sales boost in the “strong” final quarter of the year.

Earlier this year, Boots announced the plans to close 300 stores in the UK by next June which are in “close proximity to each other”.

They intend to reduce the number of stores in the UK from 2,200 in June of this year to 1,900. It's understood that the forthcoming cost-cutting measures will primarily target their US operations.

The following plans for the cost cut come just weeks before the announcement of Walgreens’ new chief executive, Tim Wentworth taking over the company on 23 October.

However, the UK’s performance was “stronger” than elsewhere in the group. In the year-ago quarter, the company witnessed a substantial uptick in comparable pharmacy sales, surging by 9.9 per cent.

Similarly, comparable retail sales in Boots UK also showed impressive growth, marking an 11.7 per cent increase, with positive performance seen across all product categories and a notable four per cent boost in foot traffic.

Seb James, Boots UK and Ireland managing director said: “I am really encouraged to see continued strong performance as the work that we have done to expand our ranges, drive value and innovate in beauty seems to be resonating extremely well with customers.

“We have great plans for the year ahead including our new Beauty store in Battersea, a further extension of our beauty category, expansion of our online doctor service and much more.”