Walgreens

Retail

Walgreens told analysts their retail business was boosted by price hikes

Walgreens credited growth in their retail profit margins to “strategic pricing and promotion optimization and stabilizing shrink levels.” “JAMES KEHOE, EXECUTIVE VP & GLOBAL CFO, WALGREENS BOOTS ALLIANCE, INC.: Turning next to our U.S. Retail business. Overall, we saw good retail performance as we continue to benefit from our omnichannel and mass personalization initiatives. Comp retail sales decreased 1.9%, and this was largely due to lapping a very strong prior year quarter when sales advanced 6.2%. Overall, our retail business has good underlying momentum with 13% growth on a 3-year stack basis. On a full year basis, comp retail sales were up a strong 6%, the highest in nearly 2 decades with positive contributions from personal care, beauty and cough, cold, flu as well as COVID-19 OTC tests, which contributed about 3 percentage points of growth.Retail gross margin expanded throughout the year, reflecting the effective margin management, including strategic pricing and promotion optimization and stabilizing shrink levels.” (Q4 2022 Walgreens Boots Alliance Inc Earnings Call, 10/13/2022)

A Walgreens executive noted “ When gas prices are high, people don’t travel as much to a Walmart, they go to a Walgreens” as a reason why the company was focused on building private label brands. “JAMES KEHOE EXECUTIVE VP & GLOBAL CFO, WALGREENS BOOTS ALLIANCE, INC.: On the flip side, there could be a deeper recession. Well, we think our business is differentiated against mainstream retailers. I’m talking front of store for a minute — that we’re not in the same high ticket categories where we have smaller baskets. When gas prices are high, people don’t travel as much to a Walmart, they go to a Walgreens, right? So we have — and we have an intense focus on building a much, much bigger owned label business. And we intend to — we don’t say we’re insulated but we’re far more insulated than some of the other peers out there.” (Q4 2022 Walgreens Boots Alliance Inc Earnings Call, 10/13/2022)