Walgreens posts surprise sales drop, plans huge beauty revamp

Drugstore chain operator Walgreens Boots Alliance Inc reported a surprise drop in quarterly sales on Wednesday, citing challenging market conditions in Europe and the impact of a stronger dollar.

The company also said it would repurchase up to $1 billion worth of shares until Dec. 31.

Walgreens said sales from its international business fell 14.5 percent to $3.10 billion in the second quarter ended Feb. 28. Sales in its wholesale business, which also operates in Europe, fell 10.6 percent to $5.03 billion.

The average value of the dollar has risen 3.3 percent against a basket of currencies in the three months ended February.

Sales in the quarter were also hurt by a drop in front-end sales at its U.S. stores due to weak demand for consumables and personal care items.

Front-end sales, which include sales of non-prescription drugs, beauty products and toiletries, account for a third of the U.S. pharmacy business.

Walgreens has been trying to revive U.S. retail sales, or front-end sales, mainly by sprucing up its beauty business, which is a big traffic driver. The company said it would roll out revamped beauty sections in more than 1,000 stores by the end of 2017. It renovated beauty units in over 1,800 stores last year.

The company said it would close 60 stores in addition to the 200 closures announced in 2015 as part of a cost-cutting plan.

The largest U.S. drugstore chain, which has been waiting nearly a year and a half for regulatory approval to buy smaller rival Rite Aid Corp, did not provide an update on the deal.

Net income attributable to Walgreens, rose to $1.06 billion, or 98 cents per share, in the quarter, from $930 million, or 85 cents per share, a year earlier.

Net sales fell to $29.45 billion from $30.18 billion a year earlier. Analysts on average had expected sales to remain flat.