And second is the lower adjusted effective tax rate, the timing of that played out for us in the second quarter. And so we do expect a much more normalized tax rate in the second half. Now, as you think about bridging into ‘25, a couple of themes to consider. First, U.S. Healthcare growth, you see that we’re maintaining our guidance on adjusted EBITDA, which is at the midpoint of the range, $375 million increase year-over-year in fiscal ‘24. And so we do see as we look ahead into ‘25, we do see growth continuing in healthcare. Village, we expect to continue to drive growth as they focus on the core markets, as well as continue on their cost actions that they are going through this year. So that’s one part. Shields obviously continues to grow throughout the year.
And we do expect them to continue to grow into fiscal ‘25. Second, cost savings. If the actions we have taken in the first half will have a ramp up effect in the second half, we’re not done yet. We continue to make decisions to right-size our cost structure here at WBA. And so we do expect a wraparound effect of that into fiscal ‘25. Third, retail business in the US, as I shared in my prepared remarks, we have seen headwinds persisting for longer than expected in the US retail environment. And we have lowered our expectation for the second half or for the full year fiscal ‘24 to a negative 3% comp. Now within that, we do expect slight improvement over time in the second half as the actions that Tracey and the team are taking will take hold and will drive certain level of improvement.
So I don’t think about what that is going to be into ‘25. And then maybe the last piece on this is, our business does have some seasonality and so pharmacy services business which has really performed strong throughout the first half and that does generate significantly higher contributions in the first half compared to the second half of the year, couple flu season does have both impact on our pharmacy business in the US as well as on the retail business in the US and the timing of that on a more normalized basis does play out more in the first half than in the second half. And lastly just on the seasonality pieces, another example is Boots which does have higher contributions in the holiday seasons in the first half. So we’ve got a factor those, I just want to make sure you have those things.
Operator: Our next question comes from Charles Rhyee with TD Cowen.
Charles Rhyee: Yes, thanks for taking the questions. I wanted to drill down a little bit more on the retail segment, US Retail here. Tim, you talked about a number of things, right, trying to increase own brand, real line around a number of national brands as well. Maybe can you talk about how quickly some of those can be implemented here, particularly as you think about realigning around fewer national brands, like how long would that process take? And then, you mentioned that vaccines have been leading in the pharmacy services part of the business. Is there any way you can give us a sense on when we look at US retail, AOI, maybe not quantitatively, but qualitatively to a sense of how you would split the contribution between, let’s say, pharma services, traditional front end and pharmacy?
Tim Wentworth: Thanks, Charles. So your second question. We’re not prepared today to break that out. Obviously, we build from that. And I think over time we’re going to be looking to give you incremental visibility to key operating metrics that would help you model some of that out. What I can tell you is the vaccine and test and treat and so forth portfolio is very meaningful in terms of our overall back of the store reimbursements and our growth. If you think about it, it’s actually quite amazing. Five to 10 years ago, let’s go 10 years ago, pharma had pretty much abandoned vaccines on a large scale basis. A lot of the companies had moved away. There was not a strong incremental demand. Today we see it as one of the key areas of innovation inside pharma companies.
And the exciting part for us that is underappreciated is that in every case, those companies look to their core ability to get to patients as being able to leverage what we do at Walgreens and what our industry does. And we have a unique position in that. The conversations I have with the CEOs of major pharma companies that are driving these innovations suggest to me that that model where we’re paid fairly for the work that we do at the back of the store is a model that the future not only needs, but is going to reward our shareholders. As it relates to US retail, I’ll turn it over to Tracey other than to say, that is one of a number of key areas for us. The idea of SKU rationalization alongside of growing private label. I think you’ve got to look at both of those things.
And we are moving rapidly on a lot of things. We announced last week, a change in store manager compensation for 2024. Initially that was thought to need to be till ‘25 to get it right. And we found a way to get it done now so that we could unleash the energy of our key field-based leadership in our stores. And so what I’ve seen is our ability, and we saw it during COVID, our ability to execute quickly when we’ve got a goal, when we’ve got a clear ability to create value, is something that I’ve actually been pleasantly surprised by since I’ve joined the company. And Tracey’s been leading the, along with, I’ve terrorized a few national brands myself in a few meetings lately, in terms of saying that we’re looking for partners and we aren’t going to be a partner to everybody.
We want somebody that is going to be everything to us rather than something for everyone. So with that, Tracey, you want to give a little color on the whole national brand strategy?
