On November 26, 2021, in Manhattan, New York City, a person rode past a Walgreens truck owned by Walgreens Boots Alliance.
Andrew Kelly | Reuters
walgreens Fiscal fourth-quarter sales and adjusted profit reported on Tuesday beat Wall Street forecasts as the company cut costs to try to stay out of trouble.
The retail pharmacy chain also said it plans to close about 1,200 stores over the next three years, including 500 stores in fiscal 2025 alone. The company said the closures will be “immediately accretive” to its adjusted earnings and free cash flow.
Walgreens has Approximately 8,700 locations In the U.S., the company says a quarter of them are unprofitable.
The company’s shares rose about 8% in premarket trading.
The results cap a difficult fiscal year for Walgreens in 2024, as the company faces pharmacy reimbursement pressure, weak consumer spending and challenges related to its push into primary care. The company said on Tuesday it exceeded its goal of cutting $1 billion in costs in fiscal 2024, which included closing underperforming stores, laying off employees and using artificial intelligence to improve supply chain efficiencies.
In June, Walgreens said it planned to close “a significant number” of underperforming stores in 2027.
Here’s how Walgreens’ report for the three months ended Aug. 31 compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: 39 cents adjusted, 36 cents expected
- Revenue: $37.55 billion, $35.76 billion expected
Walgreens’ sales for the quarter were $37.55 billion, an increase of 6% over the same period last year.
The company reported a fiscal fourth-quarter net loss of $3 billion, or $3.48 per share. This reflects a so-called valuation allowance designed to reduce the company’s deferred tax assets primarily related to opioid settlements.
This compares with a net loss of $180 million, or 21 cents per share, in the same period last year.
Excluding certain items, adjusted earnings per share for the quarter were 39 cents.
Walgreens CEO Tim Wentworth, who took over nearly a year ago, said in a press release that the fourth quarter and full fiscal year results “reflect our progress in cost management, working capital planning and capital expenditure reductions.” Strictly enforce it.”
The company’s guidance for fiscal 2025 was in line with analysts’ expectations. Walgreens expects growth in its U.S. health care and international businesses to be offset by declines in its retail pharmacy business.
Walgreens expects adjusted earnings per share of $1.40 to $1.80 for the next fiscal year. Analysts expected adjusted profit of $1.75 per share, according to LSEG.
The company also forecasts revenue of $147 billion to $151 billion this year. Wall Street analysts estimated sales at $147.3 billion.
Growth in all three business units
Walgreens reported growth in all three of its business units during the fiscal fourth quarter.
Sales of the company’s U.S. healthcare division jumped to $2.11 billion, a 7.1% increase from the same period last year.
Analysts had expected sales of $2.1 billion, according to StreetAccount estimates.
This partly reflects the growth of primary care provider VillageMD and specialty pharmaceutical company Shields Health Solutions. Shields sales surged 27.8% during the period, which the company attributed to growth in existing partnerships.
Specialty pharmacies are designed to deliver medications with unique handling, storage and dispensing requirements, often for patients with complex conditions such as cancer and rheumatoid arthritis.
Notably, Walgreens posted a steep net loss in its fiscal second quarter as it recorded a hefty charge of nearly $6 billion related to the decline in the value of its VillageMD investment. In August, the company said in a securities filing that it was considering selling the provider.
On August 14, 2023, a Walgreens pharmacy in Somerville, Massachusetts, posted a sign advertising COVID-19 vaccinations.
Brian Snyder | Reuters
Sales of Walgreens’ U.S. retail pharmacy division reached $29.47 billion in the fourth fiscal quarter, a 6.5% increase from the same period last year. Analysts had expected sales of $28.09 billion, according to StreetAccount estimates.
This segment operates the company’s pharmacies, which sell prescription and over-the-counter medicines as well as health and wellness, beauty, personal care and food products.
Walgreens said that due to factors such as rising prices of brand-name drugs, pharmacy sales increased by 9.6% year-on-year this quarter, and sales at similar pharmacies increased by 11.7% year-on-year.
Total prescriptions, including vaccines, for the quarter were 302 million, an increase of 1.7% from the same period last year. Notably, lower prescription drug reimbursement rates dented pharmacy profits, the company said.
Retail sales fell 3.5% from the same period last year and 1.7% from retail sales. The company cited a “challenging” retail environment, among other factors.
Walgreens’ international division operates more than 3,000 retail stores overseas and generated fiscal fourth-quarter sales of $5.97 billion. An increase of 3.2% compared with the same period last year.
Analysts expected revenue of $5.81 billion in the period, according to StreetAccount.
The company said sales at its UK pharmacy chain Boots rose 2.3%.
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