An individual rides previous a Walgreens truck, owned by the Walgreens Boots Alliance, in Manhattan, New York Metropolis, on Nov. 26, 2021.
Andrew Kelly | Reuters
Walgreens on Tuesday reported fiscal fourth-quarter gross sales and adjusted revenue that beat Wall Avenue’s expectations, as the corporate slashes prices in an try to steer itself out of a tough spot.
The retail drugstore chain additionally mentioned it plans to shut roughly 1,200 shops over the following three years, which incorporates 500 in fiscal 2025 alone. The corporate mentioned these closures will likely be “instantly accretive” to its adjusted earnings and free money move.
Walgreens has round 8,700 places within the U.S., 1 / 4 of which it says are unprofitable.
The corporate’s shares jumped about 6% in premarket buying and selling.
The outcomes cap a rocky fiscal 2024 for Walgreens, which is grappling with pharmacy reimbursement strain, softer shopper spending and challenges associated to its push into major care, amongst different points. The corporate on Tuesday mentioned it surpassed its goal of slashing $1 billion in prices throughout fiscal 2024, which included shuttering underperforming shops, shedding workers and utilizing synthetic intelligence to make its provide chain extra environment friendly, amongst different efforts.
In June, Walgreens mentioned it intends to shut a “important” variety of its underperforming shops by 2027. Tuesday’s announcement seems to be the corporate’s first actual estimate for what number of places it can shutter.
This is what Walgreens reported for the three-month interval ended Aug. 31 in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by LSEG:
- Earnings per share: 39 cents adjusted vs. 36 cents anticipated
- Income: $37.55 billion vs. $35.76 billion anticipated
Walgreens booked gross sales of $37.55 billion for the quarter, up 6% from the identical interval a yr in the past.
The corporate reported a internet lack of $3 billion, or $3.48 per share, for the fiscal fourth quarter. That displays a so-called valuation allowance meant to cut back the corporate’s deferred tax belongings primarily associated to opioid settlements.
It compares with a internet lack of $180 million, or 21 cents per share, for the year-earlier interval.
Excluding sure gadgets, adjusted earnings have been 39 cents per share for the quarter.
The fourth-quarter and full fiscal yr outcomes “mirrored our disciplined execution on value administration, working capital initiatives and capex discount,” Walgreens CEO Tim Wentworth, who stepped into the position almost a yr in the past, mentioned in a launch.
The corporate’s steering for fiscal 2025 was in step with analysts’ expectations. Walgreens expects progress in its U.S. well being care and worldwide segments, which will likely be offset by a decline in its retail pharmacy section.
Walgreens anticipates adjusted earnings per share of $1.40 to $1.80 within the coming fiscal yr. Analysts count on an adjusted revenue of $1.75 per share, in response to LSEG.
The corporate additionally sees income for the yr at $147 billion to $151 billion. Wall Avenue analysts estimate gross sales of $147.3 billion.
Development throughout all three enterprise models
Walgreens reported progress throughout its three enterprise divisions within the fiscal fourth quarter.
Gross sales from the corporate’s U.S. health-care unit jumped to $2.11 billion, up 7.1% in contrast with the identical interval a yr in the past.
Analysts had anticipated gross sales of $2.10 billion, in response to estimates compiled by StreetAccount.
That partly displays progress in primary-care supplier VillageMD and specialty pharmacy firm Shields Well being Options. Shields gross sales jumped 27.8% through the interval, which the corporate attributed to progress inside current partnerships.
Specialty pharmacies are designed to ship drugs with distinctive dealing with, storage and distribution necessities, usually for sufferers with advanced circumstances equivalent to most cancers and rheumatoid arthritis.
Notably, Walgreens posted a steep internet loss within the second-fiscal quarter because it recorded a hefty almost $6 billion cost associated to the decline in worth of its funding in VillageMD. In August, the corporate mentioned in a securities submitting it’s contemplating a sale of the supplier.
An indication advertises Covid vaccine pictures at a Walgreens Pharmacy in Somerville, Massachusetts, on Aug. 14, 2023.
Brian Snyder | Reuters
Walgreens’ U.S. retail pharmacy section generated $29.47 billion in gross sales within the fiscal fourth quarter, a rise of 6.5% from the identical interval final yr. Analysts had anticipated gross sales of $28.09 billion, in response to estimates compiled by StreetAccount.
That section operates the corporate’s drugstores, which promote prescription and nonprescription medication in addition to well being and wellness, magnificence, private care, and meals merchandise.
Walgreens mentioned pharmacy gross sales for the quarter rose 9.6% and comparable pharmacy gross sales elevated 11.7% in contrast with the year-earlier interval as a result of worth inflation in model drugs, amongst different components.
Whole prescriptions crammed within the quarter together with vaccines totaled 302 million, a 1.7% improve from the identical interval a yr in the past. Notably, falling reimbursement charges for pharmaceuticals reduce into pharmacy margins, the corporate mentioned.
Retail gross sales fell 3.5% from the prior-year quarter, and comparable retail gross sales declined 1.7%. The corporate cited a “difficult” retail atmosphere, amongst different components.
Walgreens’ worldwide unit, which operates greater than 3,000 retail shops overseas, posted $5.97 billion in gross sales within the fiscal fourth quarter. That is a rise of three.2% from the year-ago interval.
Analysts anticipated income of $5.81 billion for the interval, in response to StreetAccount.
The corporate mentioned gross sales from its U.Okay.-based drugstore chain, Boots, elevated 2.3%.
