Walgreens Boots Alliance Inc came up short of analysts' estimates for quarterly revenue on Thursday, as sales of personal care products and over-the-counter drugs fell both in its home market and at its UK-based Boots chain.
Brick-and-mortar drug retailers have been hit as consumers are increasingly buying over-the-counter treatments from online retailers such as Amazon.com. Pharmacies in the United Kingdom are also suffering from a cut in reimbursement rates by the government.
To stem the losses, the largest U.S. drugstore operator by store count has been trying to boost sales through its prescription-only pharmacy business by signing pilot projects with online beauty retailer Birchbox and supermarket chain Kroger Co.
The company also said it would be investing in new stores and online operations to counter weakness in the UK.
Comparable retail sales in its international unit fell 0.9 percent. In the United States, it was down 1.9 percent.
Overall, revenue rose nearly 11 percent to $33.44 billion, but missed the average analyst estimate of $33.78 billion, according to I/B/E/S data from Refinitiv.
The company's quarterly profit, however, beat analysts' expectations, helped by its purchase of rival Rite Aid stores.
It agreed to buy 1,932 Rite Aid stores last year to widen its footprint in the United States and give it more heft to bargain better on price with drugmakers.
"Our businesses have mostly done a good job of growing or at least holding their own in a tough year in many of our markets," Chief Executive Officer Stefano Pessina said.
Walgreens forecast 2019 adjusted profit of $6.40 to $6.70 per share, compared with the average analyst estimate of $6.45 per share, although it said that number included the effect of $3 billion of share repurchases this year.
"We are moderately encouraged that Walgreens is starting to make long overdue changes," said Neil Saunders, managing director of GlobalData Retail.
Excluding items, the company earned $1.48 per share, beating analysts' expectation of $1.45 per share.
Same-store sales at its pharmacies rose 1.3 percent, beating analysts' expectations for a 0.57 percent rise.
The drug-store retailer's shares were up 1.5 percent at $73.4 in volatile trading, largely outperforming the broader market.
(Reporting by Aakash Jagadeesh Babu and Manas Mishra in Bengaluru; Editing by Anil D'Silva and Sweta Singh)