CVS Health Posts Better-Than-Expected Earnings Ahead of Potential Retail Recovery

As vaccinations continue to roll out, drugstores are optimistic their sales will normalize after a less than ideal 2020.

Walgreens and CVS Health have expressed optimism for the second half of the year, and there are some early signs of recovery.

• CVS administered 17 million vaccine doses through the end of April, up from three million as of Feb. 16. Alongside Covid testing, that’s helped CVS bring in customers, CEO Karen Lynch said during a recent earnings call.
• Q1 revenue outpaced analysts’ expectations at $69.1 billion, up from $66.8 billion in 2020.
• Walgreens’ total US retail sales fell 6.6% YoY during its most recent quarter. Revenue rose 4.8% to $32.8 billion, though it missed analysts’ estimates.

Retail revival: Sucharita Kodali, Forrester principal analyst, believes drugstore retail sales should improve as customers return to regular shopping habits.

• “These companies are essential retailers and what is baffling is they were not one of the sectors that had a huge lift in the way grocery stores did, so that’s a little bit strange,” Kodali told Retail Brew. “They should be up from 2020, because all of 2020 was down in comparison to 2019.”

Zoom out: Drugstores aren’t just sitting on their hands waiting for customers to return. Last week, Walgreens rolled out nationwide contactless delivery, and Rite Aid, CVS, and Walgreens now offer walk-up vaccinations. — KM