Walgreens exceeded Wall Street expectations in its fiscal first-quarter earnings and revenue as the drugstore chain works to streamline operations, close underperforming stores, and cut costs, CNBC reports.
Despite ongoing challenges, the company maintained its fiscal 2025 adjusted earnings guidance of $1.40 to $1.80 per share.
For the quarter ending November 30, Walgreens reported:
- Earnings per share: Adjusted 51 cents vs. 37 cents expected.
- Revenue: $39.46 billion vs. $37.36 billion expected.
This performance represents a 7.5% increase in revenue compared to the same period last year, driven by growth across its three main business segments. Shares rose approximately 10% in premarket trading following the announcement.
Walgreens has faced a difficult landscape in 2024, grappling with pharmacy reimbursement pressures, softer consumer spending, and hurdles in its push into primary care. The company has embarked on a multiyear cost-reduction strategy, including plans to close 1,200 underperforming stores over the next three years, with 500 closures expected in fiscal 2025.
These closures reflect a broader effort to stabilize operations and focus on its retail pharmacy-led business model.
“While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model,” CEO Tim Wentworth said.
Segment Performance
- U.S. Retail Pharmacy: Generated $30.87 billion in sales, a 6.6% increase from the prior year, exceeding analyst expectations of $29.21 billion. Pharmacy sales rose 10.4%, with comparable pharmacy sales up 12.7%, driven by brand medication price inflation and an uptick in prescriptions filled. However, retail sales fell 6.2%, reflecting weaker demand for discretionary items and a mild cough, cold, and flu season.
- U.S. Health-Care: Sales jumped over 12% to $2.17 billion, driven by growth in primary-care provider VillageMD and specialty pharmacy Shields Health Solutions. This exceeded analyst predictions of $2.09 billion.
- International Segment: Revenue climbed 10.2% to $6.43 billion, beating analyst expectations of $5.85 billion. Walgreens’ U.K.-based Boots chain saw a 4.5% increase in sales.
Despite strong sales, Walgreens reported a net loss of $265 million for the quarter, compared to a $67 million net loss in the year-ago period. The loss was attributed to higher operating expenses tied to its restructuring efforts.
The company did not provide updated annual sales guidance in its earnings release but previously projected fiscal 2025 revenue of $147 billion to $151 billion. Walgreens continues to invest in growth areas such as primary care and specialty pharmacy services, aligning with its long-term strategy to adapt to a shifting retail and healthcare environment.
