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Walgreens Reports Stronger Profit as Covid-19 Vaccine Rollout Ramps Up

The early returns on the company’s strategy look good.
(Jonathan Weiss)
(Jonathan Weiss)
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Walgreens Boots Alliance posted strong profits for the latest quarter, WSJ reports.

Why It Matters: It looks like Walgreens’ efforts to establish itself as a “cornerstone” in the rollout of Covid-19 vaccines is working. To date, it has administered somewhere over eight million vaccines, with four million in March alone and further capacity to do even more.

  • New CEO Rosalind Brewer took the role in January and has led the effort.

Walgreens isn’t alone on the distribution effort. As vaccinations ramp up around the country, and states open up eligibility wider, rivals like CVS and supermarkets Walmart and Kroger are jumping in on the vaccine front. Each of these chains are vying to get more and more consumers in the door through the vaccine rollout.

Numbers To Consider:

  1. Walgreens posted $32.8 billion in sales for the quarter ending Feb. 28, nearly 5% up from the year-ago period.
  2. It also saw a 2% gain on the comparable sales front, and a 4.5% one in pharmacy items specifically.
  3. Profit improved to $1.03 billion, up from $946 million in the year-before period.

Justin Oh:

This is a great sign for Walgreens ($WBA) and CVS ($CVS). Pharmacy sales are meaningfully more profitable than convenience sales for these companies. 

Vaccines probably won’t be a direct contributor to profits, but it should increase traffic into the pharmacies, which should lead to more pharmacy and convenience sales in 2021. 

My thesis is that Covid-19 will be endemic for years to come, with annual vaccines being required. In that sense, at least some of the extra vaccine traffic should stick around into the future.

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