Walgreens on Friday reported fiscal first-quarter earnings and sales that beat expectations as the corporate closes stores and cuts other costs to emerge from the difficult situation.
Here's what Walgreens reported for the three-month period ended Nov. 30, in comparison with Wall Street's expectations based on an LSEG analyst survey:
- Earnings per share: 51 cents adjusted versus 37 cents expected
- Revenue: $39.46 billion versus expected $37.36 billion
Even after the large price losses, Walgreens stuck to its adjusted earnings forecast for the 2025 fiscal 12 months of $1.40 to $1.80 per share. The company didn’t provide annual revenue guidance in its press release. In October, Walgreens said it expected revenue of $147 billion to $151 billion for the fiscal 12 months.
The company's shares rose 27% on Friday.
“We began the fiscal year making progress toward our financial and strategic priorities despite the challenging situation for our consumers,” Walgreens CEO Tim Wentworth said during an earnings conference call Friday.
“Importantly, we have begun to capitalize on the opportunities we view as essential to our longer-term turnaround,” he said, adding that the “cornerstone” of those efforts was stabilizing the U.S. retail pharmacy business.
Walgreens capped a difficult past 12 months marked by pharmacy reimbursement pressures, weaker consumer spending at its stores and challenges related to its push into primary care, amongst other things. The results are coming amid reports that the corporate is in talks to sell to non-public equity firm Sycamore Partners.
In its fiscal first quarter, Walgreens posted revenue of $39.46 billion, up 7.5% from the identical period last 12 months, as its three business segments grew.
The company reported a net lack of $265 million, or 31 cents per share, for the fiscal first quarter. That compares with a net lack of $67 million, or 8 cents per share, within the year-ago period.
Walgreens said the loss was primarily because of higher operating losses reflecting its multi-year plan to shut underperforming stores. This includes 1,200 over the subsequent three years, including 500 within the 2025 financial 12 months alone.
According to its own information, Walgreens has around 8,500 retail pharmacies within the USA website. The company expects to “significantly increase the pace of our store closures compared to the first quarter,” Wentworth said.
Excluding certain items, adjusted earnings for the quarter were 51 cents per share.
Aside from the shop closures, Wentworth said Walgreens is “refining the way we forecast, allocate and schedule workforces” across its stores. The company is rolling out a brand new scheduling model at around 200 locations in January to enhance the shopping experience for purchasers, patients and employees.
The changes would involve scheduling work based on store-specific demand patterns, while also taking into consideration team member availability and preferences, he said.
However, Wentworth noted that turning around the patron retail business “has become more difficult due to the continued deterioration in consumer discretionary spending.” Buyers were pressured by inflation and better rates of interest and continued to exhibit value-oriented behavior, Wenworth said.
“We are advancing a number of elements of our retail strategy,” he said. “Although we are seeing early green shoots, we still have a lot of work to do here.”
Growth across all business areas
Walgreens reported growth across its three business segments within the fiscal first quarter.
The company's U.S. pharmacy division generated revenue of $30.87 billion, up 6.6% from the identical period last 12 months. Analysts had expected sales of $29.21 billion, in keeping with StreetAccount estimates.
This unit operates the Company's drugstores, which sell prescription and over-the-counter medications, in addition to health and wellness, beauty, personal care and grocery products.
Walgreens said pharmacy sales increased 10.4% and comparable pharmacy sales increased 12.7% within the quarter in comparison with the identical period last 12 months, due partly to cost inflation for brand-name drugs.
Total prescriptions filled within the quarter, including vaccines, were 316.3 million, up 1.5% from the identical period last 12 months. Retail sales fell 6.2% in comparison with the identical quarter last 12 months, and comparable retail sales fell 4.6%. The company cited a weaker cough, cold and flu season in addition to lower sales in discretionary product categories.
Revenue from the corporate's U.S. healthcare division jumped to $2.17 billion within the fiscal first quarter, up greater than 12% from the identical period last 12 months. Analysts had expected sales of $2.09 billion, in keeping with StreetAccount estimates.
This reflects, partly, the expansion of primary care provider VillageMD and specialty pharmacy company Shields Health Solutions. Specialty pharmacies are designed to provide medications with unique handling, storage and distribution requirements, often for patients with complex medical conditions.
Walgreens' international unit, which operates greater than 3,000 retail stores abroad, had sales of $6.43 billion within the fiscal first quarter. This is a rise of 10.2% in comparison with the identical period last 12 months.
Analysts expected revenue of $5.85 billion for the period, in keeping with StreetAccount.
The company said sales at its UK-based drugstore chain Boots rose 4.5%.
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