Boots purchase blots Walgreen’s balance sheet but sales rocket

Joseph Millis
Walgreen bought a 45 per cent stake in Boots in 2012
American drugstore giant Walgreens yesterday reported a $239m (£147m) fourth-quarter loss caused, mainly, by a huge accounting charge from its purchase of British high street chemists Alliance Boots.

The bottom line in the reported quarter was impacted by an $866m non-cash loss on the amendment and exercise of the company’s Alliance Boots call option.

However, it posted fourth-quarter sales of $19.1bn, an increase of 6.2 per cent compared to the same period a year ago, while sales for the year 2014 ending 31 August rose 5.8 per cent to a record $76.4bn.

Walgreen bought a 45 per cent stake in Boots in 2012, and it had until next year to decide whether to buy the rest of the British chemist.

But the company, with outlets in more than 8,000 locations, said last month that it had decided to complete that deal. Walgreen spokesman Michael Polzin said that because the company exercised that option early, it had to remove its value from its books. That led to the non-cash charge.

Walgreens president and chief executive Greg Wasson said: “Our fourth quarter performance was in line with our expectation, recognising we have much more to do. We closed the fiscal year by exercising the option for the second step of our strategic transaction with Alliance Boots… We maintained solid expense control in the fourth quarter and are moving forward with the implementation of our previously announced cost-reduction initiative to achieve $1bn in savings by the end of fiscal 2017.”

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