Walgreens raises full-year outlook, appoints CEO

Walgreens Boots Alliance Inc, the largest U.S. drug store chain, raised its full-year profit forecast on Thursday and said acting Chief Executive Officer Stefano Pessina will take over on a permanent basis.

The 73-year-old Pessina was chairman of European health and beauty retailer Alliance Boots before engineering the merger with Walgreen Co in December.

"The board decided that, bearing in mind the pace of change and the amount we have still to do, there is a benefit to stability at the senior level in the organization," Pessina, who has been acting chief executive for six months, said on an earnings conference call.

The company has decided to focus on operational and strategic tasks instead of appointing someone new to the business during this period, he said.

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Walgreens Boots also reported a stronger-than-expected quarterly profit for the third straight quarter as it benefits from higher sales and lower operating costs at its U.S. retail business. The company's shares rose over 3 percent on Thursday.

The company said it is on track to reach its target of at least $650 million net synergies in fiscal year 2015 from the merger and $1 billion in fiscal year 2016.

To boost sales and margins, the company has also launched a $1.5 billion cost-cutting plan, which includes store closures and freezing salary hikes for senior U.S. executives.

Sales at the company's U.S. retail pharmacy division rose 5.3 percent to $20.4 billion in the third quarter, accounting for about three-quarters of total revenue.
Comparable sales at U.S. Walgreens and Duane Reade stores rose 1.6 percent
in the quarter.

Walgreens Boots raised its full-year 2015 profit forecast to $3.70-$3.80 per share from $3.45-$3.65 per share.

Analysts, on average, had expected full-year earnings of $3.64, according to Thomson Reuters I/B/E/S.

Net income attributable to Walgreens Boots rose to $1.30 billion, or $1.18 per share, in the third quarter from $714 million, or 74 cents per share, a year earlier.

Operating costs at the U.S. pharmacy and retail business were equal to 20.9 percent of division sales in the third quarter, down from 22.5 percent a year earlier.

Excluding items, the company earned $1.02 per share, beating analysts' average estimate of 87 cents.

Net sales rose 48 percent to $28.80 billion. Analysts, on average, had expected sales of $29.6 billion.