People walk past Walgreens on November 3, 2024 in Brookline, Massachusetts.
Danielle DeVries | CNBC
Walgreens on Friday said fiscal first-quarter earnings and revenues beat expectations as it closes stores and cuts other costs to recover from a difficult situation.
Here's how Walgreens reported for the three months ended November 30 compared to Wall Street expectations, based on a survey of analysts conducted by LSEG:
- Earnings per share: Adjusted 51 cents vs. expected 37 cents
- Income: USD 39.46 billion against the expected USD 37.36 billion
Even after the big gains, Walgreens maintained its fiscal 2025 adjusted earnings guidance at $1.40 to $1.80 per share. The company did not include annual sales guidance in its release. In October, Walgreens said it expected fiscal year revenue of $147 billion to $151 billion.
The stock jumped about 10% in pre-market trading.
The company has completed the difficult past year marked pressure on pharmacy reimbursementsofter consumer spending and the challenges associated with it refer to primary health careamong others. The results are coming among reports that the company is in talks to sell private equity firm Sycamore Partners.
In its fiscal first quarter, Walgreens reported sales of $39.46 billion, up 7.5% from the same period a year ago, as its three business segments grew.
In its fiscal first quarter, the company reported a net loss of $265 million, or 31 cents per share. This compares with net loss for the prior year of $67 million, or 8 cents per share.
Walgreens said the loss was primarily due to higher operating losses, which reflect a multi-year plan to close underperforming stores. This includes 1,200 over the next three years, with 500 of them in fiscal year 2025 alone.
Walgreens has approximately 8,500 retail pharmacies across the United States, according to data website.
Excluding certain items, adjusted earnings for the quarter were 51 cents per share.
The first quarter results “reflect our disciplined execution of our 2025 priorities: stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow and continuing to work on reimbursement models,” Walgreens CEO Tim Wentworth said in the release.
He added that “while our transition will take time, our early progress strengthens our confidence in a sustainable retail pharmacy-based operating model.”
Development across all business units
Walgreens reported growth in all three of its business segments during its fiscal first quarter.
The company's U.S. retail pharmacy business generated sales of $30.87 billion, up 6.6% from the same period last year. Analysts expected sales of $29.21 billion, according to StreetAccount estimates.
This unit operates company-owned drugstores that sell prescription and over-the-counter drugs, as well as health and wellness, beauty, personal care and food products.
Walgreens said pharmacy sales for the quarter increased 10.4% and comparable pharmacy sales increased 12.7% from the year-ago period, among other factors due to price inflation for branded drugs.
The total number of prescriptions filled in the quarter, including vaccines, was 316.3 million, an increase of 1.5% compared to the same period a year ago. Retail sales were down 6.2% from the prior-year quarter, and comparable retail sales were down 4.6%. The company cited a weaker cough, cold and flu season and lower sales in discretionary product categories as the reason.
Sales at the company's U.S. health care unit rose to $2.17 billion in the fiscal first quarter, up more than 12% from the same period a year ago. Analysts expected sales of $2.09 billion, according to StreetAccount estimates.
This partly reflects the growth of primary care company 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 conditions.
Walgreens' international unit, which operates more than 3,000 retail stores abroad, reported sales of $6.43 billion in its fiscal first quarter. This means an increase of 10.2% compared to the period a year ago.
Analysts expected revenue of $5.85 billion in the period, according to StreetAccount.
The company reported that sales of the British drugstore chain Boots increased by 4.5%.