Walgreens stock rallies after profit and sales beat expectations, helped by an acceleration of business in February

Shares of Walgreens Boots Alliance Inc.
WMB,
+0.66%
rallied 2.6% in premarket trading Tuesday, after the health care services and drug store chain reported fiscal second-quarter profit that beat expectations, but fell from a year ago due in part to lower COVID-19 testing and vaccinations. Net income for the quarter to Feb. 28 fell to $703 million, or 81 cents a share, from $883 million, or $1.02 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of $1.16 was above the FactSet consensus of $1.10. Sales grew 3.3% to $34.86 billion, well above the FactSet consensus $33.53 billion, boosted by an “acceleration” in February. U.S. Retail Pharmacy sales slipped 0.3% to $27.6 billion, but was above the FactSet consensus of $26.5 billion, while international increased 1.6% to $5.7 billion and U.S. Healthcare revenue more than doubled, to $1.6 billion from $500 million. Gross margin contracted to 20.2% from 22.8%, as cost of sale rose more than sales, up 6.8% to $27.81 billion. Looking ahead, the company affirmed its fiscal 2023 adjusted EPS guidance range of $4.45 to $4.65, which surrounds the FactSet consensus of $4.50. The stock has shed 11.8% year to date through Monday, while the Consumer Staple Select Sector SPDR exchange-traded fund
XLP,
+0.53%
has eased 1.6% and the Dow Jones Industrial Average
DJIA,
+0.60%
has slipped 2.2%.