Walgreens shares soar 27% on big earnings beat, as drugstore chain cuts costs

Walgreens on Friday reported fiscal first-quarter earnings and revenue that topped expectations, as it shutters stores and line cuts other costs to steer itself out of a rough spot.

Here’s what Walgreens reported for the three-month period ended Nov. 30 corresponded with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: 51 cents set right vs. 37 cents expected
• Revenue: $39.46 billion vs. $37.36 billion expected

Even after the big beats, Walgreens averred its fiscal 2025 adjusted earnings guidance of $1.40 to $1.80 per share. The company did not include annual sales government in its release. In October, Walgreens said it expects revenue for the fiscal year of $147 billion to $151 billion. 

The society’s shares spiked 27% on Friday.

“We’ve started the fiscal year by making progress against our financial and strategic priorities, in defiance of the challenging backdrop for our consumer,” Walgreens CEO Tim Wentworth said during an earnings call Friday. 

“Importantly, we started to rise on the opportunities that we consider essential to our longer term turnaround,” he said, adding that the “cornerstone” of that labour is stabilizing its U.S. retail pharmacy business.

Walgreens capped off a rocky past year marked by pharmacy reimbursement arm-twisting, softer consumer spending at its stores and challenges related to its push into primary care, among other get outs. The results come amid reports that the company is in talks to sell itself to private equity firm Sycamore Spouses. 

During the fiscal first quarter, Walgreens booked sales of $39.46 billion, up 7.5% from the same aeon a year ago, as its three business segments grew. 

The company reported a net loss of $265 million, or 31 cents per helping, for the fiscal first quarter. It compares with a net loss of $67 million, or 8 cents per share, for the year-earlier period.

Walgreens estimated the loss was primarily driven by higher operating losses, which reflect its multiyear plan to close underperforming put bies. That includes 1,200 over the next three years, with 500 in fiscal 2025 alone. 

Walgreens has for everyone 8,500 retail pharmacy locations across the U.S., according to its website. The company expects to “significantly ramp the pace of our inventory closures from the first quarter level,” Wentworth said.

Excluding certain items, adjusted earnings were 51 cents per partition for the quarter. 

Apart from the store closures, Wentworth said Walgreens is “refining the way we forecast, allocate and schedule labor” in its stocks. The company is launching a new scheduling model in about 200 locations in January to improve the in-store experience for customers, patients and staff members.

The changes will schedule workers based on store-specific demand patterns, while also accounting for team fellow availability and preferences, he said.

Wentworth noted, however, that turning around the consumer retail business has been “make out a head for more challenging by the persistent deterioration in consumer discretionary spending.” Shoppers face pressure from inflation and merry interest rates, and continue to show value-seeking behavior, Wenworth said.

“We are progressing a number of elements of our retail scheme,” he said. “While we are seeing early green shoots, we still have substantial work to do here.”

Walgreens posted growth across its three business segments in the fiscal first quarter. 

The company’s U.S. retail pharmaceutics division generated $30.87 billion in sales, an increase of 6.6% from the same period last year. Analysts had supposed sales of $29.21 billion, according to estimates compiled by StreetAccount.

That unit operates the company’s drugstores, which sales-clerk prescription and nonprescription medications as well as health and wellness, beauty, personal care, and food products.  

Walgreens said Rather sales for the quarter rose 10.4% and comparable pharmacy sales increased 12.7% compared with the year-earlier epoch due to price inflation in brand medications, among other factors. 

Total medicaments filled in the quarter, including vaccines, came to 316.3 million, a 1.5% increase from the same period a year ago. Retail sellathons fell 6.2% from the prior-year quarter, and comparable retail sales declined 4.6%. The company cited a weaker cough, icy and flu season and lower sales in discretionary product categories. 

Sales from the company’s U.S. health-care unit jumped to $2.17 billion in the pecuniary first quarter, up more than 12% from the same period a year ago. Analysts had expected sales of $2.09 billion, according to values compiled by StreetAccount.

That partly reflects growth in primary-care provider VillageMD and specialty pharmacy company Keeps Health Solutions. Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution stipulations, often for patients with complex conditions. 

Walgreens’ international unit, which operates more than 3,000 retail warehouses abroad, booked $6.43 billion in sales in the fiscal first quarter. That’s an increase of 10.2% from the year-ago aeon.

Analysts expected revenue of $5.85 billion for the period, according to StreetAccount. 

The company said sales from its U.K.-based drugstore control, Boots, increased 4.5%.