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People walk past Walgreens on November 3, 2024. in Brooklyn, Massachusetts.
Danielle DeVries | CNBC
Walgreens on Friday reported first-quarter earnings and revenue that beat expectations as the company closes stores and cuts other costs to avoid a difficult situation.
Here’s what Walgreens reported for the three months ended Nov. 30, compared with Wall Street expectations based on a survey of analysts by LSEG:
- Earnings per share: 51 cents adjusted vs. 37 cents expected
- income: $39.46 billion versus the $37.36 billion expected
Even after the strong results, Walgreens maintained its fiscal 2025 adjusted earnings guidance of $1.40 to $1.80 per share. The company did not include annual sales guidance in the release. In October, Walgreens said it expected fiscal year revenue of $147 billion to $151 billion.
Shares rose more than 5% in premarket trading.
The company ended a difficult last year under the sign pressure compensation pharmacysofter consumer spending and related issues push into primary careamong other issues. The results are coming among the reports that the company is negotiating a sale to private equity firm Sycamore Partners.
In the fiscal first quarter, Walgreens reported sales of $39.46 billion, a 7.5% year-over-year increase, driven by growth in its three business segments.
The company reported a net loss of $265 million, or 31 cents per share, for the fiscal first quarter. That compares with a net loss of $67 million, or 8 cents per share, in the year-ago period.
Walgreens said the loss was primarily driven by higher operating losses, reflecting its multi-year plan to close underperforming stores. That includes 1,200 over the next three years, with 500 in fiscal year 2025 alone.
According to Walgreens, there are about 8,500 pharmacies in the United States site.
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 business by optimizing our footprint, controlling operating costs, improving cash flow and continuing to leverage reimbursement models,” Walgreens CEO Tim Wentworth said in a release.
He added that “while our turnaround will take time, our early progress reinforces our belief in a sustainable retail pharmacy operating model.”
Growth in business units
Walgreens reported growth in three business segments in the first quarter of the fiscal year.
The company’s U.S. pharmacy division had sales of $30.87 billion, up 6.6% year-over-year. Analysts had expected sales of $29.21 billion, according to StreetAccount estimates.
This division operates the company’s pharmacies, which sell prescription and non-prescription drugs, as well as health and wellness, beauty, personal care and food products.
Walgreens said pharmacy sales rose 10.4% in the quarter and comparable pharmacy sales increased 12.7% year-over-year due to higher prices for brand-name drugs, among other factors.
The total number of prescriptions written during the quarter, including vaccines, was 316.3 million, which is 1.5% more than the same period last year. Retail sales fell 6.2% from the year-ago quarter, while comparable retail sales fell 4.6%. The company cited a weaker cough, cold and flu season and lower sales in discretionary product categories.
Sales at the company’s U.S. medical unit jumped to $2.17 billion in the fiscal first quarter, up more than 12% year-over-year. Analysts had expected sales of $2.09 billion, according to StreetAccount estimates.
This partly reflects the growth of primary care provider VillageMD and specialty pharmacy company Shields Health Solutions. Specialty pharmacies are designed to deliver medications with unique handling, storage, and distribution requirements, often to patients with complex medical conditions.
Walgreens’ international division, which operates more than 3,000 retail stores overseas, reported $6.43 billion in sales in its fiscal first quarter. This is 10.2% more than last year.
Analysts had expected revenue of $5.85 billion for the period, according to StreetAccount.
The company said sales at its UK pharmacy chain Boots rose 4.5%.
