(Bloomberg) -- The retail industry may be ailing, but for Walgreens Boots Alliance Inc. the cure is more pharmacies.
The drugstore has completed its takeover of 1,932 new stores from a deal last year with Rite Aid Corp. While same-store sales in the front of Walgreens’ U.S. drugstores, where customers buy items like toilet paper and toothpaste, fell 2.7 percent in the fiscal second quarter, sales at the pharmacy counter in the back of the store grew 5.1 percent.
“Our growth strategy of increasing and consolidating volume, differentiating ourselves through value and quality of service, and controlling costs is bearing fruit across our businesses,” Chief Executive Officer Stefano Pessina said in a statement Wednesday announcing the results.
Pessina was noncommittal about whether Walgreens would follow peers that are announcing mergers up and down the health-care supply chain. Walgreens’ biggest retail competitor, CVS Health Corp., is buying health insurer Aetna Inc. for about $68 billion in a bid to tame health-care costs. This month, Cigna Corp. cut a deal to buy Express Scripts Holding Co., a drug benefit manager, for $54 billion.
“We will try to do reasonable M&A, if possible. Otherwise, we would give back the money to the shareholders,” Pessina said on a conference call with analysts Wednesday. The U.S. drugstore business makes up more than 70 percent of the company’s sales.
That doesn’t mean the business won’t change -- in the future its pharmacies “have to be very, very different,” Pessina said. “I don’t believe that the change is only possible if you merge with a health plan.”
Walgreens shares were up less than 1 percent to $66.41 at 10:22 a.m. in New York.
Adjusted earnings were $1.73 a share in the fiscal second quarter ended Feb. 28, beating analysts’ estimates. The company also raised its fiscal 2018 adjusted earnings outlook to $5.85 to $6.05 a share.
©2018 Bloomberg L.P.