However, WBA doubled in size between the great financial crisis and the present day, notably following the acquisition of Boots in the UK at the end of 2014. On the other hand, the group has suffered from a continuous erosion of its margins; ditto for its profitability, despite a five-fold increase in financial leverage over the period.
Behind this disaster are the usual suspects: poorly-integrated acquisitions; massive share buy-backs with no head or tail, i.e. at excessively high valuations and, on the ground, fierce competition from CVS, Amazon and e-commerce in general.
A first light may be at the end of the tunnel, as Boots has just managed to transfer the £4.8 billion financial obligations linked to its pension plans to the insurer Legal & General. This debt represented a substantial obstacle to a sale of the British company, which has been up for sale since 2021.
Not only has this obstacle been removed, but Boots appears to be on the road to recovery after a complicated sequence of store closures. Sales are recovering, and so are margins. A sale at ten to twelve times operating profit would bring in around $5 billion for WBA.
This clearly improved its solvency. Last year, the Group further stretched its already strained financial structure to acquire VillageMD and seek new growth drivers in medical services.
The stars may be aligning, even if WBA is not out of the woods yet. Its CEO, who was poached from Starbucks two years ago to revitalize the store network, was dismissed following the failure of her strategy.