Walgreens 2015 Annual Report Download - page 10

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monthly. Through the boots.com website and integrated mobile application, our ‘order and collect’ service
allows customers to order from a range of over 30,000 products by 8:00 p.m. and collect by noon the following
day from approximately 90% of the United Kingdom’s retail stores as of August 31, 2015.
The Boots Advantage Card loyalty program, where customers earn points on purchases for redemption at a later
date, continues to be a key element of the Boots offering. As of August 31, 2015, the number of active Boots
Advantage Card members totaled approximately 16 million. For this purpose, we define an active member as
someone who has used their card in the last six months.
In addition, Boots in the United Kingdom is one of the leaders in the optical market with 637 practices, of which
177 operated on a franchise basis as of August 31, 2015. Approximately 30% of these optical practices are
located in Boots stores with the balance being standalone optical practices.
The components of the division’s sales are Pharmacy (typically the sale of prescription drugs and provision of
pharmacy-related services, subject to variation in particular jurisdictions depending upon regulatory and other
factors) and Retail (primarily the sale of health and beauty products including beauty, toiletries and lifestyle
merchandising, non-prescription drugs and, in the United Kingdom, the provision of optical services).
The division’s sales are subject to the influence of seasonality, with the second fiscal quarter typically the
strongest as a result of the winter holiday period. This seasonality affects the division’s proportion of sales
between Retail and Pharmacy during certain periods. Subsequent to the Second Step Transaction, for the months
of January through August 2015, Pharmacy and Retail sales represented 37% and 63% of total division sales,
respectively.
The division’s Retail sales, gross profit margin and gross profit dollars are impacted by, among other things, the
highly competitive nature of the health and beauty category, specifically our and our competitors pricing actions,
promotional offers and events and our customer’s desire for value and convenience.
The division’s Pharmacy sales, gross margin and gross profit dollars are impacted by governmental agencies and
other third party payers seeking to minimize increases in the costs of healthcare, including pharmaceutical drug
reimbursement rates. In the United Kingdom, our largest market for Pharmacy sales in the division, the amount
of government funding available for pharmacy services is reviewed and agreed with the pharmacy industry on an
annual basis, has been broadly unchanged for the last two years.
In addition, performance as measured in U.S. dollars is impacted by the exchange rates used to translate these
amounts into U.S. dollars, the exchange rate of British Pounds Sterling being the most significant.
Pharmaceutical Wholesale
Our Pharmaceutical Wholesale division (excluding equity method investments), which mainly operates under the
Alliance Healthcare brand, supplies medicines, other healthcare products and related services to more than
140,000 pharmacies, doctors, health centers and hospitals each year from 302 distribution centers in 12 countries,
primarily in Europe, as of August 31, 2015.
The distribution of prescription medicines to pharmacists comprises the vast majority of the division’s sales. Our
wholesale businesses seek to provide high core service levels to pharmacists in terms of frequency of delivery,
product availability, delivery accuracy, timeliness and reliability at competitive prices. We also offer customers
innovative added-value services to help pharmacists develop their own businesses. This includes membership of
Alphega Pharmacy, our pan-European network for independent pharmacies, which, as of August 31, 2015, had
over 6,500 members.
In addition to the wholesale of medicines and other healthcare products, our businesses provide services to
pharmaceutical manufacturers who are increasingly seeking to gain greater control over their product
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