Home BUSINESS The three directions that drive sales growth at Walgreens

The three directions that drive sales growth at Walgreens

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Walgreens Boots Alliance Inc. in New York. a woman passing by Boots No. 7 cosmetics for sale in a store.

Michael Nagl | Acesparks | Getty Images

When people left their homes again, the Walgreens Boots Alliance said they would order passport photos, refresh makeup bags, and pull up their sleeves for Covid-19 shots.

These three sales drivers contributed higher-than-expected earnings in the financial third quarter. The pharmacy chain said it has raised its prospects this year and is more confident after recovering sales and mastering Covid vaccines.

Global finance director James Kehoe said he has hit more than 25 million hits – close to 17 million in three months.

Shares of the pharmacy chain fell to investors on Thursday, worried that the vaccines would provide a short-term boost in sales. The company is in the midst of a turnaround led by former Starbucks CEO, new CEO Rose Brewer, and some think the company’s transformation will take time.

But Kehoe said he sees encouraging signs for the coming months, such as returning store traffic and spending it arbitrarily.

At a time when the pandemic was at its height, pre-sales at stores in Walgreens plummeted as shoppers bought daily items such as shampoo and toothpaste online or at a grocery store as they combined shopping trips. Clients opted out of categories such as makeup, cold and flu medications mainly because they wore masks.

That’s starting to change, Kehoe said. Sales in the photography section grew 54% in the U.S. compared to the same quarter last year, and sales of beauty products increased by about 15%. On its website and in stores, Walgreens sells a variety of photographic-related items, including passport photos and wall decorations – these two lines attract customers as they build their homes and make travel plans again. .

A company spokesman said Walgreens was particularly strong in the photography department in passport photos and print publications.

Across the ocean, Walgreens also saw a restoration of beauty. Boots has more than 500 beauty brands in its UK pharmacy network, including 34 new brands this fiscal year.

According to Kehoe, the number of shoppers visiting stores is growing in all geographic markets, from rural to urban, with a significant increase in store operations in cities. In the United States, sales increased by about 7 percent and basket volume fell by about 5 percent as more customers returned to stores but did not buy as they did during the backup phase of the global health crisis.

More of Walgreens ’sales are also taking place online, as the company saw a 95% increase in digital sales, which began digitally in the third quarter. Walgreens said the new shopping opportunities added during the pandemic – nearly 6 million road trips and driving orders – have been fulfilled.

John Boylan, a senior stock analyst who covers Edward Jones ’key products for shoppers, says the money spent in departments like beauty and photography has a positive impact on the pharmacy network – if it’s possible to keep them.

“They’re going to be very useful things in the store, as well as traffic drivers,” he said. “It will help the Walgreens have more addresses.”

However, Neil Saunders, managing director of GlobalData, said Walgreens is holding itself back with “incompetent” stores and displays, emphasizing convenience instead of inspiration. He noted that its comparable sales grew 1.7 percent year-on-year, or 2.6 percent excluding tobacco – a small amount that covered other national expenses, including other retailers.

While Walgreens is adding health services such as primary care clinics, Saunders said store fronts also need to be changed to make them dazzling.

“Among other things he’s working on, Walgreens needs to rethink its retail and redesign the experience to suit modern buyers,” he said in an email. “Any failure to do so will keep Walgreens struggling in retail and missing out on many growth opportunities.”

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