Walgreens has been renovating its stores and changing its product mix. (LHP/Allison Bell)

(Bloomberg) — Walgreens Boots Alliance Inc.’s cost-cutting measures helped the drugstore chain beat analysts’ earnings estimates for the fiscal second quarter, as U.S. same-store retail sales dropped again after a mild flu season and pharmacy revenue growth weakened.

Recent efforts to renovate stores and add higher quality items to bring in shoppers have yet to pay off. In the United States, where Walgreens (NYSE:WBA) makes almost 80 percent of annual revenue, same-store retail sales fell 0.3 percent in the quarter ended in February, according to a statement Tuesday. It’s the second quarterly decline in a row for that measure of sales, which excludes the newest stores.

See also: Walgreens expands drugstore empire in $9.4 billion Rite Aid deal

The shares dropped 3.4 percent to $83.41 at 10:27 a.m. in New York.

Earnings, excluding one-time items, were $1.31 a share, compared with the $1.28 average of analysts’ estimates compiled by Bloomberg. The company also raised the lower-end of its 2016 earnings forecast.

The company “continued to navigate through a challenging environment,” with cost savings and strong international profits helping make up for weak prescription numbers at U.S. drugstores, Ross Muken, an analyst for Evercore ISI who recommends buying the shares, said in a note to clients.

U.S. drugstore sales were $21.5 billion, up 2.1 percent from a year ago, while same-store sales were up 2.2 percent. Overall sales rose 14 percent to $30.2 billion. Analysts anticipated $30.7 billion. The weak flu season reduced U.S. same-store retail sales by 1 percentage point and lowered comparable U.S. pharmacy sales by 0.3 percentage points. The company raised the lower end of its earnings guidance by 5 cents, to a range of $4.35 to $4.55 a share.

See also:

CVS profit in line with estimates as pharmacy sales increase

UnitedHealth raises forecast as services unit boosts profit

    

Are you following us on Facebook?

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.