Walgreens is seeing an impressive turnaround from last quarter’s dismal results.
The company’s gross margins jumped nearly 40% in the last quarter.
The retailer’s net income was up nearly 30% in that time, which included a $1.9 billion profit.
But there’s a catch.
The profit margin at the company’s largest stores, which have a total of more than 2,000 stores in the U.S., is only slightly better than its net income of about $8.6 billion in the same period last year.
The biggest difference, though, is in the amount of money Walgreen makes on each product sold.
Last year, it made $3.8 billion from the $7.25 billion in revenue it generated in the quarter.
Now, it makes $2.7 billion, a 10% increase.
It’s worth noting that while sales are down, the company is also seeing a decline in its retail footprint.
The average store in the company has more than doubled in size since last year, to 1,200 locations.
That’s a big boost, and a big reason why the company was able to sell nearly 2 million more products in Q1 than in Q4 last year — a year when it had more than 7,000 locations.
This is especially impressive considering that Walmart’s sales were down 8.9% year-over-year in the first quarter.
But that wasn’t the whole story.
The real story is that Walgens gross margin jumped 15% in Q3 from Q2 to the third quarter, the first time that it’s ever increased in three quarters in a row.
That was thanks to its new “green” pricing program, which includes rebates for items that are cheaper than their conventional counterparts.
These include the store-brand items like the “Fresh” line of beauty products and the “Honey and Nut” line.
Walgills green pricing program has also increased the value of its low-priced products like the Fresh Club, which has seen sales rise over 5% over the last year and a half.
In other words, Walgarts green pricing has been a big part of the turnaround at the retail giant.
The takeaway: Walgies gross margin is still way down compared to the same time last year even though the company made more money.
That is the kind of performance that’s going to keep Walgends cash flow buoyant and its earnings growth up.