People make their means close to a Walgreens pharmacy on March 09, 2023 in New York City.
Leonardo Munoz | Corbis News | Getty Images
Walgreens on Friday reported fiscal first-quarter earnings and income that topped expectations, because it shutters shops and cuts different prices to steer itself out of a tough spot.
Here’s what Walgreens reported for the three-month interval ended Nov. 30 in contrast with what Wall Street was anticipating, based mostly on a survey of analysts by LSEG:
- Earnings per share: 51 cents adjusted vs. 37 cents anticipated
- Revenue: $39.46 billion vs. $37.36 billion anticipated
Even after the massive beats, Walgreens maintained its fiscal 2025 adjusted earnings steerage of $1.40 to $1.80 per share. The firm didn’t embody annual gross sales steerage in its launch. In October, Walgreens mentioned it expects income for the fiscal yr of $147 billion to $151 billion.
The firm’s shares spiked greater than 20% in morning buying and selling.
“We’ve began the fiscal yr by making progress in opposition to our monetary and strategic priorities, regardless of the difficult backdrop for our client,” Walgreens CEO Tim Wentworth mentioned throughout an earnings name Friday.
“Importantly, we began to progress on the alternatives that we contemplate important to our long run turnaround,” he mentioned, including that the “cornerstone” of that effort is stabilizing its U.S. retail pharmacy enterprise.
Walgreens capped off a rocky previous yr marked by pharmacy reimbursement pressure, softer client spending at its shops and challenges associated to its push into primary care, amongst different points. The outcomes come amid reports that the corporate is in talks to promote itself to personal fairness agency Sycamore Partners.
During the fiscal first quarter, Walgreens booked gross sales of $39.46 billion, up 7.5% from the identical interval a yr in the past, as its three enterprise segments grew.
The firm reported a internet lack of $265 million, or 31 cents per share, for the fiscal first quarter. It compares with a internet lack of $67 million, or 8 cents per share, for the year-earlier interval.
Walgreens mentioned the loss was primarily pushed by greater working losses, which replicate its multiyear plan to shut underperforming shops. That contains 1,200 over the subsequent three years, with 500 in fiscal 2025 alone.
Walgreens has round 8,500 retail pharmacy areas throughout the U.S., in line with its website. The firm expects to “considerably ramp the tempo of our retailer closures from the primary quarter degree,” Wentworth mentioned.
Excluding sure gadgets, adjusted earnings have been 51 cents per share for the quarter.
Apart from the shop closures, Wentworth mentioned Walgreens is “refining the best way we forecast, allocate and schedule labor” in its shops. The firm is launching a brand new scheduling mannequin in about 200 areas in January to enhance the in-store expertise for patrons, sufferers and workers.
The modifications will schedule staff based mostly on store-specific demand patterns, whereas additionally accounting for group member availability and preferences, he mentioned.
Wentworth famous, nevertheless, that turning across the client retail enterprise has been “made more difficult by the persistent deterioration in client discretionary spending.” Shoppers face strain from inflation and better rates of interest, and proceed to point out value-seeking habits, Wenworth mentioned.
“We are progressing quite a few parts of our retail technique,” he mentioned. “While we’re seeing early inexperienced shoots, we nonetheless have substantial work to do right here.”
Growth throughout enterprise items
Walgreens posted progress throughout its three enterprise segments within the fiscal first quarter.
The firm’s U.S. retail pharmacy division generated $30.87 billion in gross sales, a rise of 6.6% from the identical interval final yr. Analysts had anticipated gross sales of $29.21 billion, in line with estimates compiled by StreetAccount.
That unit operates the corporate’s drugstores, which promote prescription and nonprescription drugs in addition to well being and wellness, magnificence, private care, and meals merchandise.
Walgreens mentioned pharmacy gross sales for the quarter rose 10.4% and comparable pharmacy gross sales elevated 12.7% in contrast with the year-earlier interval because of value inflation in model drugs, amongst different components.
Total prescriptions stuffed within the quarter, together with vaccines, got here to 316.3 million, a 1.5% improve from the identical interval a yr in the past. Retail gross sales fell 6.2% from the prior-year quarter, and comparable retail gross sales declined 4.6%. The firm cited a weaker cough, chilly and flu season and decrease gross sales in discretionary product classes.
Sales from the corporate’s U.S. health-care unit jumped to $2.17 billion within the fiscal first quarter, up greater than 12% from the identical interval a yr in the past. Analysts had anticipated gross sales of $2.09 billion, in line with estimates compiled by StreetAccount.
That partly displays progress in primary-care supplier VillageMD and specialty pharmacy firm Shields Health Solutions. Specialty pharmacies are designed to ship drugs with distinctive dealing with, storage and distribution necessities, typically for sufferers with advanced situations.
Walgreens’ worldwide unit, which operates greater than 3,000 retail shops overseas, booked $6.43 billion in gross sales within the fiscal first quarter. That’s a rise of 10.2% from the year-ago interval.
Analysts anticipated income of $5.85 billion for the interval, in line with StreetAccount.
The firm mentioned gross sales from its U.Okay.-based drugstore chain, Boots, elevated 4.5%.
