Walgreens Boots Alliance, Inc. (NASDAQ:WBA) Q2 2023 Earnings Call Transcript

Rosalind Brewer : Yes. So I can’t talk much about March, but I will tell you that we saw a good exit rate leaving the second quarter, February was a stronger month for us than December, January. So if that’s any indication, I would also mention here around our script comp business, we’ve got 500 stores returned to normal operating hours. I’d also mention, too, that where we are seeing improvement in our normal operating stores like 6%, there’s opportunity as we look at our execution in those stores to go even — to improve those numbers even better. So operating behind the momentum we’re getting in our stores that operate well. And then I would tell you that we’re doing a lot of work in terms of inventory in our stores and making sure that our operational efficiencies are happening every day in our stores. So we feel like we’re moving in the right direction in that respect. Rick, is there anything you want to add on scripts?

Rick Gates: Yes, George, I would just say we bucketed in three different areas as we look at kind of acceleration in the by second half. The first is staffing. I don’t know if we talked about quite a bit and the improvements we’re making in staffing, so they get our stores reopened. Roz talked about operations in stores and those stores that are opened or much stronger obviously than those that we’re bringing back online, and we’re continuing to work to obviously accelerate the performance of our stores that are at full hours. The third area, I think you’re going to see us work really hard at is integration with U.S. Healthcare. So how do we work with our assets like VillageMD and Shield and others to really optimize scripts recapture and those types of opportunities.

So I would just say, in summary, the focus really is on execution of operations, optimizing our store hours by market, to really win back patients and improve our shares. So I think we have a lot going on in the second half that should help us continue the trend.

James Kehoe : Yes. And George, let me just cover the sale and leaseback. But before I do, maybe just a bit of context. First of all, we believe we delivered a good in-line quarter with decent quality, and this gives us the confidence to confirm the full year guidance. And just to point out the key stat is the EPS was down 25.8%, and 26 points is due to COVID. As we look at the sale and leaseback, the program in the U.S. has contributed an incremental year-on-year net benefit of $0.03. And on a full year basis, as we’ve said before, it will be flat. On a full year, there’ll be no incremental benefit. So this is kind of timing within the quarters. The one thing that stands out a little this quarter is a cash mobilization program in Germany, as we harmonize warehouses with an acquisition from more than 12 months ago, and that contributed $0.09.

But as I mentioned in the prepared comments, these combined $0.12 are completely offset by other onetime type items going in a different direction. I pointed out that ABC sale of the stock, which cost us $0.05 year-on-year. Some prior year benefits in the UK unit relating to COVID, which was $0.03 and obviously, then we mentioned ForEx and asset impairment. So the way we look at it, we have this sale and leaseback $0.12 and an offsetting $0.12. So we had decent quality in the quarter on onetime items. So just in summary, this gave us the confidence because we’re pretty much in line with good quality. It gives us the confidence to maintain full year guidance.

Operator: Your next question comes from the line of Elizabeth Anderson from Evercore.