[1/2] People are seen shopping in a Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City, U.S., November 26, 2021. REUTERS/Andrew Kelly/File Photo

Oct 13 (Reuters) – Walgreens Boots Alliance Inc (WBA.O) reported a better-than-expected quarterly profit on Thursday, as higher UK retail sales helped more than offset waning COVID vaccination demand.

Shares of Walgreens, one of the largest U.S. pharmacies, rose nearly 3% amid bigger market weakness after the company also forecast a “better-than-feared” full-year profit.

Analysts had raised concerns about Walgreens’ near-term performance and lowered their expectations, especially after rival Rite Aid (RAD.N) cut its full-year forecast last month and flagged concerns of sustained pressure on consumer spending and supply chain challenges.

Despite inflationary challenges, Walgreens saw an uptick in retail sales, helped by higher demand for health and wellness as well as beauty products.

“With inflation at four-decade highs, consumers are expressing uncertainty about the future and seeking value. At the same time, we know that health and wellness will always be a priority and increasingly so after COVID-19,” Chief Executive Officer Rosalind Brewer said.

The company also benefited from its Walgreens Health segment, which was launched last year as part of Walgreens’ efforts to diversify its business. The unit brought in sales of $622 million in the fourth quarter.

The company now expects full-year profit in the range of $4.45 to $4.65 per share, the top end of which came above analysts’ expectations of $4.53.

J.P.Morgan analyst Lisa Gill said the forecast “will alleviate some concerns as guidance was above the feared number of below $4”.

Pharmacy sales, however, continued to be pressured in the quarter due to waning COVID vaccination demand and lower prescription volumes as staffing issues impacted pharmacy hours.

The company said it expects prescription volumes to recover next year but warned that “lower COVID activity would continue to be a sizeable headwind.”

Walgreens estimates it will administer 16 million vaccinations next year, compared to 35 million this year.

Excluding items, the company earned $0.80 per share in the quarter, compared with Refinitiv IBES estimates of $0.77.

Reporting by Mrinalika Roy and Raghav Mahobe in Bengaluru; Editing by Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.

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