SUMMARY

• As WBA continues to flat-line due to margin pressures, it is becoming an increasingly attractive value play.
• Neighbourhood health destinations provide an effective experience-based solution to transforming retail for WBA moving forward.
• Fully-owned and developed lines such as No7 provide opportunities for significant margin improvements and differentiation.

INVESTMENT THESIS

Walgreens Boots Alliance (WBA) continues to flat-line as pressures on margins and low sales growth continue to negatively impact share price. However, at current valuations, WBA is becoming increasingly attractive as a value play with a broadly defensible moat.

COMPANY BACKGROUND

Founded in 1901, Walgreens Boots Alliance remains the world retail leader in pharmaceutical products, complemented by a range of cosmetics (including own brands), personal care, and other consumer goods and services from opticians to photo services. The group employs 287,000 employees, has a market cap of $38.58bn on revenues of $138.58bn (FY 2019), and profits of $3.98bn (FY 2019).

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