WBA - Earnings call transcript Q2 2020 | Walgreens Boots Alliance, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to Walgreens Boots Alliance Incorporated Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. Instructions]. [Operator you. Thank

like speaker now Please the over conference ahead. I Gerald to Gradwell, your today, remarks. for to would hand the go prepared

Gerald Gradwell

Good are strictly our to the welcome We gentlemen, distancing. at adhering morning, social earnings here Alliance quarter call. to Boots Walgreens recommended ladies and second and

quality call our minor in to if experience any different with we're bear And I So us call. with doing locations. or on mixed audio delays this you executives the would ask you

me Stefano is with Executive our Officer and Officer Walgreens Chairman Boots line and our James of Vice the On Officer; Alliance. Operating today of Pessina, Executive Gourlay, Financial Global Chief Co-Chief Chief Walgreens Alex Boots Kehoe, Alliance;

as usual, you legal hand cautionary Harbor the you declarations. take and to Safe I make over will, some to through Before I Stefano opening comments,

cause and vary materially. results presentation, no expectations forward-looking result publicly and that or undertake actual statements competitors, based constitute statements of events, in results Certain update are of projections assumptions statements and this in subject that a as changes whether and this presentation current forward-looking otherwise. to made risks information, on uncertainties obligation any markets, regulatory future could our after to new are future We to

may the impact a affected our latest spreading statements. statements pandemic. Form that by of Please the forward-looking see as COVID-XX risks to of XX-K discussion be relate particular factors forward-looking these to for related they risk And coronavirus in note

website to most certain financial the appendix in related available In GAAP Investor on materials non-GAAP measures measures. to for the information. we you the today's financial reconciliations presentation, comparable and will Relations We directly use presentation refer our

website a our Investor find at webcast on will link the You investor.walgreensbootsalliance.com. to Relations

be this call, webcast and for website the After XX months. archived on will the presentation

to over hand I will you Stefano. now

Stefano Pessina

the COVID-XX Gerald. And everyone. very morning, is global pandemic. you, focused attention today, good Clearly everyone’s on Thank

communities people wellbeing to and in the key of of would you as and the playing our forming of delivery. frontline to healthcare health many we the the our expect, part and our on As be around we part of a address protect serve, system countries customers our world, the focus of the and healthcare to priority has part needs

are to our to teams patients and working as to times, chain our well medicines the own provide customers. in supply pharmacies other as Our our tirelessly these operates advice and both ensure and possible to wholesale testing

exercise on members want their challenging you frequently the and customers, facing will assure to of outstanding and your despite today service communities. difficult in behalf our by times. hard And the dedication, management for I manage to work people we to through get despite help these you and need. I So, our our situations executive extremely our this until very and my very for we pandemic to alongside weeks, thanking facilitating areas to been recent so of response can usual challenges of myself, team, do time, have and the immediate current focused of of end to continue to I and all on the difficult all we Board start you fellow I health want the assure our continue our personally their that But of efforts and of continue that manage see control can the we coordinating company. the

we long-term. quarter moment. a take strategic a have business with priorities, to make of in capabilities our to delivery need through remain which in James our the thrive to four good the we expectations, from seen have you you as progress announcement our continued to convinced regard in allow we in slightly which we our ahead say, will of today, Let’s have And had details

company While to our deliver and our strategic our drive forward. work continue we initiative priorities, with we deal the immediate

financial To in so the track delays expectation ask However, business. the And address are an to impact we the deliver company the to current well reported advice, second till I quarter renew refrain. for of the give quarter June, the the against work to situation we government James? of and discuss confirm to impact too taking. year. demonstrating was refocus James We of full Alex on performance and our to overview is, the the much actions some will however, me then, early you results. full our second lead COVID-XX might It will far.

James Kehoe

second better constant and the Adjusted Thank EPS quarter, expected. was Stefano, X.X% basis. came on in good lower second currency we morning. in than the year $X.XX a you, quarter Overall, prior than

With the upside U.S. better coming the in management cost from and our U.S. retail business,

major I headwind of around flagged XX% the two headwinds As quarter: adjusted true-up in impact of and reimbursement last highlighted quarter facing contract. year-on-year were call, the the these I EPS second earnings bonus items a we second combined. on two the our for

both to a results. Retail growth continued retail Wholesale prescription International In Pharmaceutical comps. another held of yet UK delivered and set Retail in improvement strong back be we and Pharmacy market, USA, delivered Pharmacy by challenging sequential

very The annual excess billion by $X.X in we on Transformational of XXXX. remains And savings Program much track. cost Cost Management expect continue to

with $X.X As the the year. generation this than of and year billion billion half was almost was better our was prior strong quarter, second for Free very first quarter. cash $X.X cash first in the flow

Stefano adjusted mentioned to guidance. track were we has that guidance. on to EPS now well full Turning our confirm already year

Management We sales our sequential of in quarter comps EPS of on a and delivered ahead our Program. Cost our track, majority including and improvement generation cash initiatives expectations. were Transformational U.S. business Second was the

to rapidly are forecast the many to position accurately related in we a right COVID-XX. future the impacts of pandemic, variables given not However, the now, changing COVID-XX

informed multiple COVID-XX come few about situation it minutes. quite to topic severity duration projections the is a will is temporary, the difficult develop in While I across back to the and markets.

now results. detail the in at more look Let's at

sales X.X%, We see sales the demand from were adverse in results. of of X.X%. basis XX days impact quarter estimate We a sales the currency a did basis last COVID-XX store as quarter including the points headwind impact constant the pandemic. result rose Second a including X.X%, it a of increased On did But growth. optimization X.X%. of of the around currency impact quarter's on up an not of favorable around have material few

U.S. constant the Program currency mainly EPS and on income Adjusted a margin bonus due business. XX% operating was growth the impacts, U.S. of currency lower and year-on-year $X.XX, to from a the by a the basis, declined Cost decline X.X%. Adjusted pharmacy Transformational partly gross offset in of solid constant our retail Management benefit

tax point X.X of the and to Our growth, GAAP points of share percentage by headwind partly declined was including XX% rate. impact EPS AmerisourceBergen's impairment from of from this our program negative offset $X.XX, contributed X.X repurchase percentage pharMEDium. share

the X.X% constant half to first currency pharmacy Let's a store the financial sales turn X.X%. were mainly including from that headwind now U.S. Bear currency and from On in of a X.X%. sales growth Pharmaceutical the headwind year. for X.X% rate increased highlights includes strong Wholesale. due basis, optimization Sales performance to up constant of the the of currency mind

EPS On a adjusted X.X%. constant currency basis, declined

contributed we rate percentage items. lower Our X.X tax tax from points as benefited a growth, of and percentage discrete contributed points X.X share repurchase program

with Retail Now the our divisions, USA. Pharmacy at let's look of starting performance

one day have As benefited this sales. is quarter from leap of second results year, extra a our

result versus sales held optimization impact first The XX the basis retail. comp improvement both adjusted a quarter the increased XX in X.X% quarter. days only all was comp back February. sales prescription store and in comp point We of from X.X%, have a numbers and comp pharmacy growth Sales first with improved to programs. basis points the sequential by our Total XXX increased of include

to entirely by result categories. pharmacy and a across X.X% higher gross declined partly only Adjusted all gross of margin a profit profit due delivery lower margin retail as key improved offset

and than general higher Management was digital Adjusted was pressures. Program X.X lower Absolute the more X.X% prior income digital the spend of true-up In of and had impact, prior of savings an was offset Cost contract, by operating in of This year-on-year impact impact as the income of investments of X.X% these and sales, development. reimbursement points SG&A and improvement impacted a growth. points adjusted total, incremental X%, XX year-on-year declined negatively year percentage Adjusted inflationary XX.X% versus SG&A than bonus percentage operating Transformational in investments around bonus XX.X%. the of IT an year.

sales the cough/cold/flu comp the and grow strong Comp growth quarter, optimization look down by aided were Medicare year, our negative at scripts business. a detail quarter Now, program. more programs. script the points prior in offset pharmacy XX.X% Part performance and pharmacy XX specialty, continued prior in versus share specialty to year. pharmacy X.X% X.X% versus XX%, to first season. and year, comp basis up grew our central versus last growth in including increased Total growth partly Market Central impact X.X% compared let's brand nicely, of up store inflation, sales D sales higher optimization improved for the reflecting store was favorable X.X% by

gross as impact than offset procurement decreased and by savings Adjusted was growth profit more of year-on-year reimbursement script pressure. the

mentioned included gross margin. impact As of on true-up with contract I basis reminder, earlier, second a XX the points quarter an around the

Turning sequential sales Retail sales comp next entirely to were We X.X% improvement and declined due our U.S. excluding in increased and retail X.X%. X.X% in business. tobacco in store comps sales quarter. retail delivered Comp up the optimization. e-cigarettes to the quarter,

points to and XX season this basis favorable cough/cold/flu rate. The year, was contributed around growth the

overall result, led of the not The growth it was of improvement flagship contribute basis Beauty gross around coming X.X% COVID-XX half. sales all demand in profit up in grew increased WBA's increased higher points and While business, gross sequential the result did solid U.S. and categories. margin growth was by comp a our for from health the quarter, which to pandemic wellness personal in growth material as retail care, was X.X%. business. the low-single-digit was XX across which and Adjusted key flat up by but first X.X% was

with UK phasing, a with in currency I'll partially a Turning to in constant lower unrest in in Thailand. Pharmacy the next to and X.X% Pharmacy civil sales favorable challenging reimbursement tourists comp market Chinese sales Boots retail due Boots declined script International quarter, and UK offset by talk increased to Chile UK, Retail decline conditions declined in Sales UK NHS X.X% to X.X% market. declining comp the volume. numbers.

in Overall, percentage premium the share Adjusted volume and XX% and operating beauty. strong in the categories higher led year-on-year sales share we retail to margin held lower over was income continued mostly points to impact UK technology due gains bonus X our due with market by investments. down in

The Pharmaceutical emerging to AmerisourceBergen currency. discuss partially also operating another the with sales offset Wholesale up by increased from X.X% delivered now I in strong growth, and and led Adjusted division, a markets by which will the UK. margin. constant lower Pharmaceutical reflecting Wholesale income revenue X% division contribution Turning quarter, higher strong gross

payments first the up in related $X.X of billion Free Turning will next the tax flow. capital This We strong prior favorable billion some same $X.X a the last third quarter, the course headwind performance with cash see impressive to on this and $X.X million. delivered of the did expect quarter. of $XXX on cash the period timing we during year working of was half year, in to strong flow billion reverse year. reflects an cash

Lastly, to increased lead may purchases in as we recent during in This levels we categories key realigned have course third quarter. inventory our some of with the volatility the demand spikes.

Transformational Let's turn to Cost our Management now Program.

on We in fiscal moved have by billion spend, to savings of On are XXXX. excess $X.X cost smart in track well quickly. we deliver annual

these implement and a significant new with we We also renewals the Interestingly, goods resale, this vendors. for are not can with be for win-win as vendors. contract savings further operating models conducting potential

On number contracts bundling based operating reviews outcome volume are and reducing we of scale, across that for in drive in organization, are of our end-to-end simplified We conducting Boots value. model the businesses. costs of smart our lower larger long-term offering suppliers field return structure organization and all business and the business UK,

for the of of We targeted Boots and XX XXX have the XXX stores closure UK closed XXX stores. Walgreens

We swiftly ahead moving are shared services. on

a Services. started operating We implementation of to we Consulting and IT have activities model already Tata the new transitioning are

and new save, Transformational before, Management Cost to generated allow business our said to I will investments us the needed the to through fund innovative Program grow. create models, to invest, As savings

important is short-term of COVID-XX is that enterprise initiatives. it highlight a to on a However, impact number having

work to facing We select deferring COVID-XX are Management mitigating that right impacts have are temporarily investments. resources And the the selectively we Program refocused from Transformational Cost us now. on

exceed that stores our as we here systems be U.S. goals. when long-term the world example challenging that or One deliver roll XXX% the are focused our need delaying prudent a out not operating on class team confident in members will to rollout delivering customer to cost Nevertheless, be remain SAP new we service environment. it would in we in our is saving

Alex. Now, to I'll hand over it

Alex Gourlay

Thank you, James.

then both undertaking in COVID-XX. retail, some undertaken in discuss trials well. in the quarter, performing Kroger the First, the I'll and the with update you to have grocery UK. we Starting U.S. impact I’m the U.S. of initiatives on the with of are going we’re

we're trialing our ambient with XX stores an Knoxville offer Walgreens ranges reminder, to Express their a Kroger produce different As in beauty to stores. Kroger in pilot ambient-only range. from Also, approaches and full a of and continues health XX fresh trial

an buying is joint group and on are data benefits to as generated new of and approximate sales we starting we in quarter. lift you Our X% will personalized and now up marketing things made in the our digital of investments progress. partnership capabilities, running further our the we the Levering which update have partnerships approach realize

nationwide well, the a TV service, allows online, used which pay over around million being brand NoX collect flagship patients our to patients. in by Express supported Walgreens in and In checkout at X% quarter, store the a in order line dedicated pharmacy, by scripts advance now campaign. is performed U.S. Also up X

Turning locations we XX the of have are with taking targeted open. opened And resource next primary five. opened partners UnitedHealthcare, to VillageMD primary five as in we’ve to two in expected, With quarter, locations four total care, the now the All centers. care.

We operating across three is in LabCorp all are partnerships as And of progress pleased to-date. XXX now sites planned. XX Walgreen with states the

continue digital momentum. to to Turning initiatives, gather which

since increase Save first million program X Trip has of Refill over Our X% signed members up, quarter. A an the

quarter our digitally-initiated The Walgreens sales. calculation including now same year. X% up was A of in Save around combined the total Trip Refills last are versus We

Our first a of XX% platform, quarter. engagement Find platform complements healthcare visits up quarter, in spanning million and healthcare round in XX Care. X we the since funding Find Also providers has Care which now to XX participated services BeWell, quarter, the increased the a in

we year-on-year our XX SAP the progress, a been up which up strong with now locations million And moving cloud. including Our has particular, Walgreens are times, year-to-date. moved the finally In app and cloud, Microsoft, S/X achievement. downloaded XX% quarter significant XX% we in to HANA up the was application to making

Boots UK. Next,

been particularly innovative be of future, follow-up in on in general with solution video Our with an operations, practitioners and online. premium We’ve this actions have and initially in consultations quarter Customers pharmacy beauty able will digital healthcare. and Boots with sessions acceleration online the book Boots.com. focused and LIVI launched to pharmacists, store,

taking to share premium in and in new introduced We total we beauty quarter, number beauty brands, continued brands market to new gain the nine our including XX. [Huda] of Beauty,

quarter Boots have We the digitalized up to accelerated largest last also now up app UK. sales XX% in of in usage X which pharmacy card, million beauty which with has quarter. downloads Boots.com it believe the and users, the health we the in active makes app, million the continued strong increasing And successfully now with The has X.X we’ve growth the Boots versus year. XX% And Advantage users. see

or huge the as the COVID-XX. in of UK seen days a we’ve past course, result XX so in Of changes

would like to context. So provide I now some

want Before together makes to for I colleagues thanks I all to the proud we and work care It to company. this take me to in to healthcare with so who my extraordinary others have heartfelt my start, much of collaborate pharmacy-led done communities work serve this very moment. express

safety frontline the and company, of well-being we our customers, is our the As number are colleagues. on a and And one priority healthcare patients the pandemic. of

our our We many positioned healthcare we in operate the provide community are in through stores distribution the and networks. to well markets across

tirelessly pharmacies patients, keeping open. our To working customers and needs our provide the we we and advice. to are medicine, are colleagues stores ensure Our of and services meet

keep federal are ensure in use to to working stores, to state of they and the help additional expanded guidance essential provide materials clean We’re operate we’ve locations. products and COVID-XX and drive-thru

Tuesday, Walgreens.com. focusing now with also fees delivery the U.S. on delivery And prescriptions both expansion We’ve free we’re We And are for X,XXX partnership the over on pharmacies Postmates in in on-demand offering on waived the available of nationwide. delivery. with and our home announced UK. delivery we eligible

Find services to customers and of our also a the through digital with connect pharmacy XX/X chat. availability We’re expanding our Care

in have growth online a on including essential the deliveries and more we items less consumer consequence products. the discretionary recently, seen daily focus categories in traffic. on as of foot items, movement, photographic noticed restrictions we in home and spending temporary of Walgreens.com in seasonal as beauty, and such drop-off healthcare of We’ve month as the And strong many living on March, prescription pharmacy

We’re and health also with and to governments Boots are Department In working the UK, Health the working U.S. to working provide drive-thru the And business officials, with is of coordination sites. partners. closely for government testing a testing and in both workers during we NHS with number of official And COVID-XX are information. customers and to dedicated providing key websites this with support in-store emails, to through Boots ways advice our crisis. provide provide Walgreens other and government

also plans, In early governments stress customers, and thank want includes We’re doing health this and to very to refills helpful we’re are working provide that to XX-day access to this authorizations. can In endeavor. this reduce our short, U.S., we all refill our being we with all on and the medications. in partners physicians

essential footprint we we reaching services. the know, and very you In pharmacy online our access through As have communities U.S., our items. convenient nationwide a network throughout to a critical have broad

our We very we wide drugs. consistent a committed giving can communities wellness pharmaceutical much as over-the-counter as uncertain fully have of a of health range supply these in summary, are we In support and and times. products, to

taking members, a protective for upfront, critical providing in do benefits fantastic certain temporary health wellness. number wellbeing doing and we expanded team resources. and and including their measures support of also this, actions, are are frontline said I the people work must and As To we our

to providing communities I is who my heartfelt started, to finish moment. giving thanks critical to like at this care where by everyone support we would I the

Back to James.

James Kehoe

COVID-XX Now around impact some full of I won’t be potential would pandemic. to Clearly, provide COVID-XX the from the the context like months. impacts for known

important is role that what’s important for are right now an our challenges the proactively playing immediate However, we and managing customers.

and considerable the weeks over we volatility expect coming situation However, is months. quite situation fluid the and evolves as the

At as we multiple the the and strong of in saw across purchases of seeing In very puts weeks number their U.S., March present, a first takes. customers categories. accelerated three sales we’re

areas. However, now especially trends, in seeing we are sales declining quarantined

predict to lower may to and While categories future as foot our it in by negatively spending customers impacted as be short-term essential discretionary everyday we by expect such This sales, realistically, future customers particularly difficult traffic. is destocking photo redirect sales see beauty is and categories. evident to

Let you through we talk March. what saw in me

have in growth books discretionary we by to seasonal. do sales beauty XX% month. from not growth comp closed category, two partially In days as first by the March, March. XX% there in While growth such very periods XX% distinct in our categories comp declines yet XX we were retail of grew for good around the in wellness performance. and month, Walgreens, visibility by and have the XX% health sales led our grocery in and offset delivered the But of We sales

post-March mid-teens March. it of first an quickly continues XX week running period, the this comp for month will the of at XXst, the in rate days of a the Obviously, decline. with However, seen last extended if negative turned uplift offset trends sales sales the trend

the significant and pull UK strong month XXst, trends, declines foot sales key with in beauty items seeing led less Again, post-March on also we growth our of trend deferred earlier trends. part significant pronounced, decline lower this lockdown footfall. saw discretionary in similar of is similar decline In forward reflecting now a street initial the the traffic. UK, has we’re with saw effectively a business initiatives. into high and scripts But Prescription the have to a the we though and in

halted halls we’ve new locations. and product moment, planned the we’ve the postponed new of our beauty launches For rollout to

traffic last a in diverted exit trends discretionary by declined pharmacy over days XX UK decline reduced single-digit the concerning. X%. the our Retail March, did foot street around it in is not XX% In significantly high sales and as that mid-teens spending consumers offset sales Mid retail But from growth sales. are away products. by declined

remaining being of this trends the services would is given are and some That over that stabilization expect are designated are our said, see we few temporary open. confident therefore sales that essential among to and a pharmacies retail we situation time, locations

recovery. we and with opticians we line will optician current our markets we care spike March. emergency stores UK, in Once for in throughout businesses our expect Wholesale advice, main XXX except the XX hubs treatments. restrictions to the closed have our across the regard demand of a quick Additionally, removed, reasonably providing rapidly and Pharmaceutical in month hearing reopen have businesses, other are seen a With

in increased has market. heavily Our the support back Generally, key business decline of exception customer an to retail other contributed on demand. investments March Thailand the from hospital increase supply with been demand Chinese sales markets, to high-teens we in impacted the which significant tourism in of additional the across in a saw by

significant On and are revenue China the seeing performing flip we JV side, our upside. very is retail well

to $XX cost Turning mostly in these of benefits store supply future A ability from the estimate to governments, employee mitigate multiple in an highly of we the assistance relating number and around months. available the and impact repeat and costs. on duration not of markets, March, costs operations costs, our cost. pandemic cost chain impacts dependent to million across Future are overall may

key well purchases also to availability products of the of and aware our a increased critical categories provide have availability You’re we categories across of a number restrictions number in of our customers. stock for significantly

see we as the some demand supply may inventory and levels Obviously, months. impact coming realign over on

are very investment other through with value-added we resources managing pulling the current and management and enterprise. situation, COVID-XX on requires and a Finally, away focused time mitigating are across COVID-XX time huge of Faced sometimes entire and the activities. we resources importantly, from

see three moving are that clear in in the as seeing there some have After are of March, sales put begun buoyant trends it’s to first lockdowns a negative of pieces. lot place. So, weeks we trends

US, on neutral the impact broadly in expect in month significant costs operational sales the March declines do with COVID-XX higher offsetting UK. revenue to However, and upside the be we

of cannot As impact multiple across we as parts, dependent look the upon markets. pandemic given severity reliable forward, year. to highly for estimates It fiscal the duration the of number COVID-XX we provide of moving and potential is the the

that this would are should be a I while temporary against Finally, to proactively And priorities. impacts, we continuing is make the highlight managing situation. that important our what’s strategic progress

Our exit convinced fundamentals are we crisis and we will in strong sound this position. global are a

me Let back for his to closing it now pass comments. Stefano

Stefano Pessina

Thank you, James.

said So ahead quarter will my in year have our the early as comments, as of too we the opening impact the to the know I pandemic reported COVID-XX expectations. on what today slightly whole. net a has been for is it our of be performance But

about pharmacy You situation is current community is and also the continue healthcare heard This health Alex the a the invest and address teams frontline sizable the in precisely This support strong to any the are healthcare across part are we are sector in healthy importance of so pharmacy our effective committed situation work of in delivery community it. very our is system. to why emphasizes we of we why communities a and James company wider a the have and from playing doing role community. active the The sector and some serve. the to of of

are markets current restrictions remember temporary. that our in must the We

will Over weeks the operating return and eventually we normal they to will a and coming change environment. more months,

medication also our an it well their and overstated. in provide and the Keeping is remember areas improving that, important that to to the the people healthcare the importance the is retail local pharmacies open cannot to of that is supply offering many products community. service is chain health. operators, important maintain also stocked convenience pharmacy valuable. our and be need And To As manage to do priority

a and and healthcare goods. own the global heart a many our as supply response cannot is been of Maintaining our distributor. pharmacies the regular to into of businesses very essential to It crisis. community has medicines supply the without of foundation operate stores other this the Our reliable we great business of current key and serve and

in are are medication, have from in to we As difficulties you our information the level there products, might that are need. significant And on demand preventative the addition our those to and in decreases who not local personal only access and increase expect, pharmacies for facing teams. medicines also protective or face self-isolating to to operating advice seeking care those getting our but a significant ensure people services they pharmacies

We and stations are national closely service and and doing regulators, use we government, provide in to we working workers. our the systems what already testing can local are number coronavirus. to testing key to against states And ensure operating with health countries support of we the fight are infrastructure to virus for

Here to can. we and where stand we would expect

experience healthcare an forward. role in the way are of Our so us the play looking in provision addressing need the reiterates enhanced of challenges to to pharmacy the virus to of operates evolve the today that we even better

and some interaction We pharmacy. time analytics, fully customer in and the an efficient with organization local a future omnichannel global and truly thinking, insights supply for reliable combination by new chain strong presence, for believe digitalized of this state-of-the-art the with understood supported a logistics the and intelligence of that have and artificial

important positioned convinced well forward we emerge today. that way for this to and as we are well our pharmacy are on This together priorities stronger period business strategic bring that's the we deliver that to come I is so service why business of that to face. even am us an this through see key this element opportunities our for is we and the future and prepare the current

invest position the great time health we play healthcare part meet confirms our business. a and providing the future in me in face belief all Seeing the period globally care confidence we as good to and action, are need greater for of the locally importance uncertainty this and in great our communities fabric for of in to in in of that national the a of the key gives infrastructure the role immediate a my for and in of of customers, our investors, At us challenges the service future. we team organization and members even

Thank you.

Now we will take questions. your

Operator

Instructions]. [Operator

first Bank. from from George comes Your question Deutsche Hill

Your line open. is

George Hill

Good last to month first is have color kind stay we look much just script appreciate for actually in morning, hear falling scripts in a trend if slowed talked normalize scripts all what March. And the very for you of the or and and questions gone sharply on I follow-up. week, and thank in in And the March? glad the about I week. part down the guess of I And kind well themselves looks the the I'd very have safe. last is ask, that taking team, the to acceleration and growth to everybody I way sequestering you guess, at Alex, like James, March has there a brief negative? then the of

Alex Gourlay

there's But trends. to has really if middle really think any been, therefore, scripts to we're like, eye What is we keeping don't develop, we we think been stockpiling, add scripts, Hi, in to here. to said of prescriptions. bigger the you close we have but I remarks, got the that. particularly has is to prepared has to don't there It's James happened a think it's change we of began some And the as And given really on their yet. situation Alex course, during people situation. detail and prepared a of early lot We remarks, on very has too lot I know, in March. of tell forward the have know as a of quantities we two if just weeks hard. think what there mean George. the fundamental It and don't

James Kehoe

of it's but XX estimate the probably Yes, to it's first on in days significant fairly the uplift but call adjusted sales similar lower tricky, a footfall pretty little a but does stay quarter, at into off a of actually basis, month the that's people second off. a we It falling mid-single-digit, respecting direct negative fall the and result territory, instructions and actually home. to

the months. get think we look forward we'll I stability more as into future

George Hill

maybe States and what business like implications into countries benefit relates doing the Italy, there of what a guys guess, That's I COVID-XX. in the in helpful. some off brief is, And any infection happened have to business to it is follow-up way then those as kind the curves are that be? of United has the of you further extrapolate would for the countries

James Kehoe

I find not I'm as And them money use sure think should quite you analogs. markets are you that will different.

saw growing it's actually business ramped the right as what very is, up above still China, before. was strongly, now high-teens. at growing that And of back peak the it's the high-teens that first hit market actually was be It stability, which it's XX% the growth. So to we up a in to in was crisis

be products. and what have So big so We an in it the Italy, in in I -- more as remarkable. think I It a can't don't analog for seen is demand should China presence But we the don't is taken think China pharmacy retail we've U.S. consistent increased directly. see in for

a to has me on because over let he this. -- pass it point Stefano probably And view has of

Stefano Pessina

of very pharmacy Well, followed well, I you have tell the versus can And is stocks, lockdown, they prior the on Initially use high the go now quite up pharmacies. significant And strictly really home were after very, for to at just Yes. say, necessary. that had it lockdown people is doing they I surely year. the trying if let's the the it the all XX% to And to pharmacy a pharmacies. are impact and Italy day-by-day. to they to difficult go course, had

in be creeping street found are lockdown has fined see who to we But see been EURX,XXX. substantial the and reduction And People to up. this pharmacies. So of a sales at reason a slowly say that have there don't the Italy in quite also the are we have the in we they can good extreme.

-- So it's stay big of to it's a home. at incentive big a course,

lockdown would pharmacy want of lockdown will relax start suffering the to even of reduced. Apparently, to in the for you quite strongly, as And the stock. the the this end out is of at be they sales pickup April, month this we be probably because imagine. people sure because Now can dramatically, see the economy will

Operator

Securities. BofA Your next from question Michael comes from Cherny

is line Your open.

Michael Cherny

would dive be cleanliness, the same all making taking everyone the cost flexing question. And it potential dynamic could safe At than need or on you're within into side. time, trends, for people you to -- the desire in promote want a in the place George's side. during little Odd I'll the you bit et mentioned to that Thanks slightly morning. stores this. these investments the echo dynamic, staying comments, I is have hope to be the or for the event some there cetera. short-term revenue that cost longer help incredibly Good

that of Given closures, you alongside level are the of of the do side prepare the lot variability see the levels seeing how shutdown? rolling base? for in cleanliness through right that business any some demand sheer you're of do and of the variable now pursue across you account these might and there going and especially within U.S., you investments the the also is of cost magnitude the employee rolling a of your these newer And lack stores across some making to that uncertainty want to you're areas shutdowns of especially

Alex Gourlay

safe. doing It's Alex for question. well I here, Michael. and thanks hope Hi, and also you're

a what and Ashworth I done have it of the examples to root U.S. the having react by in bring the to give UK to to I team in think it's life. think day-to-day. great question, couple a it team of the and you goes fantastically because I'll Richard well

these have stores, marketplace. increased customers the a businesses number the stores strip, advice strip in remarkably. which as other in where sold, base And very of have are of can cost prescriptions now our number strong had you take strong of therefore, Vegas people the our increased. our is Las but online of number to example, to being adjust Yes, had and that care we there also markets There's For in seeking have we've say, we've imagine, -- you closed. very

in stats we've some ways, remarks, sure different quickly really make service the adjusting and in country are making period people we and able during that are of online to this of areas sure accommodate time. in warehouses where people relationship, we in gave increasing Postmates through customers coming more said, We the can to been our our that prepared as to the we capacity

sides rapidly. this So of we're doing both

some We There about do other model, which again, we and fixed I'll areas, other costs, see to that have on team maybe costs maybe speak expecting absolutely and from are flexible partners. where are and more fixed looking of James to to a are driving can these strongly. areas, are the support very with pass maybe what now Richard we very

James Kehoe

as they day-to-day continue example, get Just of million, $XX don't is, the things we one. managing new a try and the more because to the periods the a we in we And will on containment cost we're The will -- efficient We'll into an operations I thing cost future how think impacts be is your question number happen. taking because expect second good the have to environment. in measures side. mitigate

would was found then guess and If we assuming stage because month would continue down to it's would areas May, is into million at $XX -- this incremental all we of the the we the stage, actually $XX actually to mitigation. into -- $XX we would June, million would is million So next shutdown project costs by say could shutdown. we come have we -- offset would and that full that to range that a literally a

player our quite closed have were you our stores comments One UK that and from a up and the furloughed basically with furloughed example have employees the stores noted the here every the prepared and XXX and employees cost we're big government the will practices British is, to a opticians in the month. of store in basically pays we $X,XXX UK, all XX% within of

being But actions can't be the allowed to think the cost rapid. you're increase are into pretty right, taken, perpetuity. I they're So

So hope we will I find answers And question. the offsets. your have to that

Michael Cherny

James. dividend, what very you. changed there quick that based anything just be commentary share you're seeing or might on any then one does, the right question repurchases, the capital deployment, it just No, additional for Any And on adjusted planned now? thoughts around

James Kehoe

Yes, good question.

you like year. saw our cash Some of the half had we in in did flows, it and time robust made We've We're of the as this $X.X to we're remain to come about the here. immediate company in competitors of convinced We we very capability what had, confident discussions QX, first we have this did in $X.X stronger. billion our and moves. out billion last quarter, the long-term

out. we're probably, $X.X So take to $X billion We've said The the benefit working year-to-date were a now, over-delivering programs we we working going capital. right against capital of billion. out about was set

Some phasing, cash the very feeling good is about but of that position. we're

about And and just we've quickly did we to up funding in partners however, million. the as We backstops we actively dried yesterday, $XXX in note, market -- pretty that. markets put the a commercial as we're secured place and paper our banking of quickly bilateral talking

call putting that quite happen. we're in black we internally we point So think conservative actually view. events will for we are funding what But from of place swan don't

time we share to last Given capital billion, with that is decided and this were billion. below very program, happy we've XX% repurchase last policy We're which with our our context, capital it's This moment happy what recall, year, are $X.X $X.X actually the repurchased for structure. doing allocation already year, we you'll we continue very with the year. which

So we're already lower.

And increase a has is dividend and all to on since of is generation every policy policy. year extremely think we basis dividends, dividend short-term. that's clear, the paid policy is But to I simplistic our the that since this -- And and -- the work dividends a is a the it's in which the on we in XXXX increased dividends company capability company. believe -- have intention strength tremendous no flow this changing tremendous of cash and

Operator

question comes Morgan Your next from Ricky Stanley. Goldwasser from

Your line is open.

Ricky Goldwasser

is the focused on question My testing.

think of able do get up mentioned What some area. focus, when is you you that You you testing, can you becoming an as you'll be of do doing But to running? were accommodate? area think volume type and drive-thrus some screening increasing

Alex Gourlay

It's under we're the the accelerate closely the much the place are Ricky. pilots the Chicago screening, waiting to you we're plans to the and have about day. of a with And government the Alex the here. U.S., working very land in It's we're Thanks we area. testing In said. and in tests see direction XXX what their very government, and really exactly as doing

both government, under the the really, we day, the having conversations we more a at part. state review have this are Things federal single level. in with every officials information senior play at So don't And people constantly lot stage. will and our are

that personnel. are We Walgreens can to people, premises all we it there appropriate Walgreens we if it's will sure do to make test do in to using

we course, have that, our is is example forward a [America]. which stepped to and company as the of a of volunteered great Another commitment point people do to have this, here again

want I to make involved. been would as also testing you've you well. know think, Stef, comments some I on

Stefano Pessina

now probably we on tests new Yes, that much new vaccine. you would many able be tests believe very be have and to And of will much in working that will short-term, probably some are many And be these of new or these that tests people the easier self-administrating. know and I and quicker. opportunities test

that be a really we at will the So have kind tests, testing necessarily will course Until operation point, of reality, have of screening. these small. be to able of the people we mass relatively don't

relative of in not the level a be test You is test, big a population. or to U.S. testing will happening but still than see higher more. that have countries in able I even we one don't in month screening. the mass this the of is you what we for new of have that believe had see don't Until that course emergency And is terms part

Ricky Goldwasser

just And follow-up. one Okay. quick

groceries. a gave in detail and what seeing the on you're decline lot front beauty, you're on You of end in the seeing

help products profile of remind give margin like script? pharmacy that versus back decline -- the of us just the you seeing, can a end sense the the you're in of So us kind discretionary

James Kehoe

want I Sorry. actually performance than don't of better consistent emphasize I to the weigh to the And the seeing people. say lost in. is And do slightly on maybe very that I'll rest even some thing be remain is I open. who or would ask categories in Alex want that One to retailers we're

here XX in our on health and month in wellness the were that XX% year-to-date we first business, The it U.S., our period. was up days the that's is across in full the frankly period, XX% euphoria So key XX% the in of driver is in and that and the actually which up -- range flagship, feeling business.

wellness think in was both a way the XX-plus is business and any was I gross about a about down good businesses -- similar lose this X% and think margin we I beauty health the March then on think have beauty margin. So, percent, and business to of up of those the month

So profitable. equally they're

a month, X quite X a large margin health the food of XX% than or category, which points to the up grocery has and that increase, then it, would either wellness. so And I about, in lower call was beauty

XX gradual -- think see current to the to business slowdown. slightly there because there obviously occurred. fastest is days, I environment. half our this margins The we business there be pointed growing be that in are last actually not when is And second shifts. attribute the then will wellness So come totally out the off, some stay a We category good even the the and -- will health home, thing. back positive impacted, the a second in believe extent shutdowns to and retailers It's the but people a at the most to that's probably profitable fall that's

stocks happen behaviors. people So their last as XX don't way system April. April are if and out going be the looking the there be reflection into We April, recovery what down, of we're some best the think to will of work will in the of will but days probably we old purchasing start think back

margin of other the with the issue So pleased be to kind we're seeing some the performance compared quite actually market. won't we And players. same as

Alex Gourlay

My it only and Yes. James well, Ricky. item, covered

is Florida evidence things is people lockdown I in discretionary full will back, and we very temporary. to the or and for sometimes the come think beauty, for a temporary happened, less believe is lockdown moment today. think this are spending when different in example, on that There's when goes well time more that where particularly being areas think are which maybe really clear But a situation that we okay, clear this place different very weeks, happened known I tougher. like days spend

would given, just but have the temporary. don't I the James anything this add I add to to is again, has point, think So I details to

you well has that's been much in is a just beauty if much the recent complete And business. except UK bit it street situation turning off. okay. times and also UK. more business to the lockdown UK, of very beauty a in the Maybe The the was and and bigger know, business high in UK, kicked doing And it's almost a grocery pharmacy, when the as healthcare a for

So when situation on the impact that the seeing the in believe in UK over. as back prepared in come business is will commented again, his therefore, But are UK, also temporary remarks. we more we James has

Operator

Morgan. next from Gill Your JP from Lisa question comes

line Your is open.

Lisa Gill

understand want things. just two I better to really

And then your recessionary does to there the agree emerging prepare are you business? it's that learned And of think recent this we this the exiting what as could seeing come XXXX, mean that that's out be back in exact is are for your my if COVID-XX what I be in business? from are that do home of timeframe potentially environment that trends that belief a secondly, will the obviously toward delivery environment? recessionary more we lessons really here But move your XXXX U.S. What some towards move temporary, will you forward? demand COVID-XX, whether nobody to the the And thoughts question. what we Would of digital, for first going some knows you're stick timeline. So

Alex Gourlay

So would I think first Stef that take question all. like of

Stefano Pessina

because we to a we to stores while and and We question to reality had service didn't on deliver a wanted fundamental problem, to market we second service. found other And try very successful. in good and Boots in the first. doing bought did to We just the this companies were the be sticking too proved we changed, much will that very, costs were having ready answer improving able had outcome. be reduce well. our good to we many Yes. the to it focused in work very when I be At the the time we very

So is you that keep one don't have we temporary and to to that costs certain you panic, have learned have working. things the of the accept organization

say, the be On and their one we people we soon. many quite have back will will I will habits will a have a have, If many to dramatic it different If a for not with period of let's go to like the depends. would hurricane will a on, will storm go and less. habits way change say timing, the also storm, then will hit back, other with summer for be short in world time, mainly different. people But dealing work. will pharmacies, a industries, mainly or will month, coronavirus sure let's the summer later changed, have suffer be industries disease, they things in with drugs, of medicines they'll the industries way. sure Other ours, And say

In this working are reality, direction. we in always

We this change even this more. be will But if case. more be will strategy environment the will strategy It even to strategy the be a right And want years focusing year digitalize couple the more maybe company, really we last that we for we on the change so, have way want any or said to to of customers. in prove right the the will important. substantially, work, strategy

James Kehoe

add just I if Lisa. wonder could I something,

they out beat it's point coming said coming important actually need EPS to from that we getting think in and sequential our which out to back the retail would a relative business in quarter where I a out strength. U.S. cost of the We're the we're was position terms what of be. we We do good operating where U.S. of control. of did comps we

is performance excellent. flow cash Our

-- a and is in advantage. an we've has question We we're at we need here This basis convenient believe locations we do your and do point looking across U.S. front good and X,XXX It's sitting -- the we've the of is, known into personalization in quarter also U.S. XXX that uplift. crisis the to in turn we've that got us. think one, I this having So and a what -- strength. accelerated this convenient what proven the we saw mass seen is

we digital needed over and in long average stuff to we when we I the consumer take weeks X months a help dramatically could normally journey is amazing two think crisis what months. find found the ourselves get to XX done. in to we done get it's how what our will And we accelerating it technology next

there and there entire transformation think it it I -- generate I is right, And industry across So will speed to up the I enhanced agility needs agenda. think will coming. think you're digital our a be

size of on other in resilient entirely were we've stimulus, economy the recession the stimulus seen think lockdown; the and of I And then economic depends the the it, alluding strongly. part, think of U.S. ability through comment, I the the growth but past the is not really duration a I'm you secondly, most to the and the of kind U.S. underestimating is think the consumer thing that the one in recessions, U.S. market. regenerate out it's in worldwide I very world of the not

massive not the -- ensure we're you general the what in U.S. for, I'm thing it's that that think of So rapid think that's will right hoping size the I I rebound. to be the stays And on economy stimulus but the doing is path. find a the fairly and to not

concerned. are I taken. moves What not the I'm not being is, saying I'm saying right So was

there credit second, up substantially. rounding examining back you when other be relative our market rating And market cash if a changed than we That sectors re-rating. stronger right here. look say, that we were then I assets were there being think said, emphasizing in stable that, hold debt And the will and a will People will up, the some the facilities, re-rating on start a on flow. well, And the be is phone at now. far has

strategic company we is the company And into ability priorities. the it that digital long-term that do against this. to turn why a in terms from we capacity, four accelerate you're this to feel the debt of have our out will our weather of right rating like agenda So come to we now of storm and stronger

agree totally your with I So point.

Operator

question your from comes last from And Valiquette Steven Barclays.

open. is line Your

Steve Valiquette

Walgreens in to So of countries drugs, the four it seem operations of discussion in has bans are ago issue across D drug certain export within issues there that is not to initiatives discuss to out nevertheless, supply Med place is But any particular more what prescription or new shortages that And you? topical about any to within able five Thanks. APAC for really the risk your potential the around weeks any shortages globally? potentially today. an you prescription be related prevent to community, investment are versus

James Kehoe

asking we've Is asking in to just confirm, I put the you're what about initiatives place you're Can supply -- right? guarantee that chain?

Steve Valiquette

Yes, correct, yeah.

a But, sort versus ago that's topical question. today. month supply risk Just is yes, shortages. This of really the maybe any more drug of

any well. background. echo there's if Sorry or an I sort of hear echo as

James Kehoe

all that's no, you take to Alex, want Yes, right. that?

Alex Gourlay

Yes, sure. Hi, Steve.

I so question, asked growth think I'll prescription there. part first the of in your you also about start

we as under just normal our view. think said X% good point were from of described, able We already, times in growth move forward James was I to, our QX as to to January marketplace. also X, think a scripts. which reasonably was important good growth about And one-third the in had that's Med season to we us, I given of comparable D on that

growth trends So was going felt our improving into and improving. the COVID were crisis, we the

a and sorry, customers we're other refill app mentioned our downloaded said as we digital our to prescriptions transparent we in on to has really terms to you manage asked Stefano their initiatives, have in allow supply terms Pass In question, Express of many -- ways. that of working initiatives use

more come, delivery, of which well. course accelerating So including home to there's now we're as

In with terms of patterning again the use pharmacy, of a growth, terms as the was different pretty UK, box. online well that’s similar -- a in that of in

movements products the on the we that in in supply terms more like in are also to due global of partnerships months some terms of we've in majority with the got products, at proprietary Healthcare, products six got feel generics great of our of wholesale companies be to again, and but with APIs right look time. three the components we've odd products and a visibility supply Alliance In and the chain, next supply again, this and the chain, good good there in paracetamol moment other to some pharma place

Steve Valiquette

or Yes, or been drug on front gyrations the you two over past if any At everything at me? and from related supply strategies the level you has the say pretty notable can pricing have manufacturer in the to the consistent pricing manufacturer month you demand would hear COVID-XX witnessed changes level?

Gerald Gradwell

Stefano? Yes,

Stefano Pessina

are to Europe, see No, also are pre-wholesaling asking the so wholesalers, market, I that no, at the so are steady. the in say, trying instance, this market, possible to And the And to this, they extremely prices a are the be we behaving manufacturers that order for have stock pre-wholesaling keeping wholesalers the manufacturers us to their really the well, use big we to in we can satisfy ready pharmacist, to distributor market. that would hospital. say They deliver to to to In moment. supply effort do market. very any the the

So, don't that we I have this in moment would say problem. really

course, ability specific to step in facilities supply these a for the specific really the not they the the But a so in market. shortage not are immediately paracetamol, the overall manufacture to is satisfy in everywhere demand. are that some up just and manufacturing world been impacting Of to because just few molecules, strong demand products, some there is there the has instance, for cases

Gerald Gradwell

speakers. Stefano. today. thank for you time to we you, That's Okay, have our all Thank actually

you from Because Let's we didn't just get we to who they're to as can Thank have than say many much the we everyone over your us call to rather to and do multiple a coming indeed IR working attend I coming to locations, want as schedule team next if you -- your calls the be will everyone happy we'll to bring you are very in. ever, be participating to calls. take call, people quarter. available we'll follow-up give to with know But questions, as days. speak

Operator

today’s and Ladies Thank call. for participating. this gentlemen, concludes conference you

now disconnect. may You

Walgreens Boots Alliance (WBA) 2 Apr 202020 Q2 Earnings call transcript