NEW YORK (TheStreet) -- Walgreens Boots Alliance (WBA) has been losing U.S. customers for the better part of the past three years. Now a new, largely European management team is giving the largest U.S. drugstore chain a fresh face.
Walgreens Boots Alliance is redoing its stores with what's meant to be a more appealing cosmetics area with a wider array of products, even as it scales back its fresh food offering, according to Bloomberg. Most prominent will be the company's own Boots No. 7 skincare line, which has proved successful at drawing customers to stores in Europe.
It's all part of a plan to make Walgreens stores the destination of choice for health-conscious women who make the bulk of purchasing decisions for their families. The early results have been encouraging for the company: in Phoenix, a test market for Boots products, customers are making more repeat purchases and spending more money each time they enter the store. And Boots No. 7 has become the city's top-selling beauty brand for Walgreens.
The company will have to overcome the hurdles that tripped up rival CVS Health (CVS), which shut down a beauty-focused initiative after failing to get high-end cosmetics brands to stock its shelves. It will also have to contend with skepticism from consumers accustomed to going to the department store to buy top-tier skincare products.
Walgreens' beautification project was set into motion by the company's $15.3 billion buyout of Alliance Boots last year, the consummation of a two-stage deal by the U.S. drugstore chain that saw Alliance Boots executives fill the majority of the top jobs in the merged company.
Investors are optimistic about the new management team's strategy. Shares of Walgreens are up 12.3% this year, outpacing the 2% gain of the S&P 500 Index and the 5.8% rise of CVS.
TheStreet Ratings team rates WALGREENS BOOTS ALLIANCE INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WALGREENS BOOTS ALLIANCE INC (WBA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
You can view the full analysis from the report here: WBA Ratings Report