Walgreens Boot Alliance (WBA) has recorded a decline in full-year profits despite increased sales in what chief executive Stefano Pessina described as “a challenging operating environment.”

The health and beauty group has posted a 20.5% decline in operating income to $5bn (£3.9bn) in the year to August 31, down 9.6% on an adjusted basis to $6.9bn (£5.4bn).

The retail group, which recorded a 4.1% uplift in sales during the period to $136.9bn (£108.8bn), said it had increased its cost-saving target from over $1.5bn to over $1.8bn by its 2022 financial year.

WBA’s international sales in the fourth quarter of the financial year fell 6.3% to $2.7bn (£2.1bn), down 1.8% on a constant currency basis and primarily driven by a 2.1% decline in sales at Boots.

Retail like-for-like sales fell 2.7% during the period, although WBA said that Boots was “maintaining share in a retail market that remains challenging”, while like-for-like pharmacy sales fell 1%, which the business attributed to “lower volume and lower NHS funding levels in the UK”.

Gross profit fell 5.4% on an adjusted basis in the quarter for WBA’s international division “mainly due to lower retail sales and margin in Boots UK”, while operating income slumped 78.7%.

Executive vice chairman and chief executive Stefano Pessina said: “We are pleased to report fiscal 2019 results in line with our previously stated guidance despite a challenging operating environment.

“We are also making progress on our four strategic priorities, which we remain confident are positioning us to deliver long-term growth. While we still face headwinds, I am encouraged by the improvement in US comparable sales performance in the second half of fiscal 2019 and our progress in managing costs in order to save to invest to grow.

“We are introducing guidance for fiscal 2020 adjusted earnings per share, which we expect will be roughly consistent with fiscal 2019 at constant currency rates – very much in line with our expectations.”