Walgreens Boots Alliance (WBA) stated on Tuesday it could shut 1,200 shops over the following three years as new CEO Tim Wentworth plots a turnaround on the struggling pharmacy chain operator hit by sluggish client spending and low drug reimbursement charges.
Walgreens inventory rose 7% earlier than the bell on Tuesday.
The corporate additionally narrowly beat Wall Road’s lowered estimates for fourth-quarter adjusted revenue, and forecast fiscal-year earnings that have been principally in-line with expectations.
Pharmacy chains are dealing with their most turbulent time in latest historical past as customers keep away from high-priced grocery gadgets and pressures mount on funds they obtain from drug middlemen for filling prescriptions.
Consequently, Walgreens’ inventory is buying and selling close to 30-year lows and down 65% this 12 months, making it the worst performing inventory on the S&P 500 index.
CEO Wentworth has unveiled a collection of adjustments since taking up the highest job final 12 months, together with the removing of a number of mid-level executives and a $1 billion cost-cutting program.
“This turnaround will take time, however we’re assured it’ll yield important monetary and client advantages over the long run,” stated Wentworth in an announcement.
The closures have been introduced in June however the firm had not disclosed the variety of affected shops at the moment. It had over 8,000 shops in the US as of Aug. 31 final 12 months.
Within the fourth quarter of its fiscal 12 months 2024, Walgreens stated it recorded impairment prices on the goodwill of dwelling care supplier CareCentrix and fairness funding in China.
Excluding these gadgets and different prices, the corporate earned 39 cents per share on an adjusted foundation. Analysts had anticipated a revenue of 36 cents per share, based on knowledge compiled by LSEG.
Comparable retail gross sales fell 1.7%, harm by “a difficult retail atmosphere”. Gross sales of groceries and different gadgets at Walgreens shops have been hit as customers more and more hunt for bargains and shun higher-priced gadgets.
For fiscal 2025, Walgreens stated it expects adjusted earnings of $1.40 to $1.80 per share, versus estimates of $1.73 per share.
(Reporting by Manas Mishra in Bengaluru; Modifying by Saumyadeb Chakrabarty)