COVID-19 took another bite out of Walgreens Boots Alliance quarterly numbers but this time left behind better-than-expected earnings.
The drugstore chain said Thursday that it made $373 million in the final quarter of fiscal 2020 after losing $1.7 billion the previous quarter, when millions of shoppers stayed home to avoid the rapidly spreading pandemic.
COVID-19 still hurt. The company estimated that the pandemic’s impact shaved about $520 million from its operating income in the most recent quarter. But Walgreens also grew sales and prescriptions in the United States and saw some improvement in the United Kingdom. Walgreens Boots Alliance Inc. runs more than 9,000 stores in the United States and several thousand locations internationally.
Company shares climbed higher than the broader market in morning trading Thursday.
Drugstore chains and other retailers were pummeled earlier this year by lockdowns that kept customers away from their stores. But as those restrictions eased, companies have since started reporting improving numbers.
Walgreens leaders told analysts Thursday that customer visits to their stores were still down, but shoppers were continuing to buy more per visit.
Sales from established U.S. stores climbed 3.6% compared to last year’s quarter. That’s an important metric because it excludes stores that recently closed or opened.
Those sales dropped 29% for the company’s Boots stores in the United Kingdom, but the company said customer visits improved steadily compared to the third quarter.
Overall, the company booked adjusted earnings of $1.02 per share in the three-month window that ended Aug. 31. Revenue climbed 2% to $34.75 billion.
Analysts expected, on average, earnings of 96 cents per share in the fiscal fourth quarter on $34.37 billion in revenue, according to financial data provider FactSet.
Company officials said they expect the pandemic’s impact on their business to subside in the second half of the new fiscal year as people start receiving vaccines — which have yet to be approved by regulators — and more customers return to their stores.
“We are confident we will come out of this in better shape,” Executive Vice Chairman and CEO Stefano Pessina said.
Walgreens forecasts low, single-digit adjusted earnings per share growth in its new fiscal year.
The company finished 2020 with adjusted EPS of $4.74. Analysts forecast, on average, earnings of $4.80 per share for fiscal 2021, which would represent growth of about 1%.
Walgreens announced in July that Pessina will step down as CEO once the company finds his replacement. He said Thursday they had no updates on that search.
Shares of the Deerfield, Illinois-based company climbed nearly 3% to $36.90 Thursday morning while the Dow Jones Industrial Average fell slightly. Walgreens is a Dow component.
Follow Tom Murphy on Twitter: @thpmurphy