Walgreens Boots Alliance (WBA) stated on Tuesday it will shut 1,200 shops over the subsequent three years as new CEO Tim Wentworth plots a turnaround on the struggling pharmacy chain operator hit by sluggish shopper spending and low drug reimbursement charges.
Walgreens inventory rose 7% earlier than the bell on Tuesday.
The corporate additionally narrowly beat Wall Avenue’s lowered estimates for fourth-quarter adjusted revenue, and forecast fiscal-year earnings that have been largely in-line with expectations.
Pharmacy chains are going through their most turbulent time in latest historical past as customers keep away from high-priced grocery objects and pressures mount on funds they obtain from drug middlemen for filling prescriptions.
Because of this, 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 modifications since taking over the highest job final 12 months, together with the elimination 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 vital monetary and shopper 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 USA 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 house care supplier CareCentrix and fairness funding in China.
Excluding these objects 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 information compiled by LSEG.
Comparable retail gross sales fell 1.7%, damage by “a difficult retail surroundings”. Gross sales of groceries and different objects at Walgreens shops have been hit as customers more and more hunt for bargains and shun higher-priced objects.
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; Enhancing by Saumyadeb Chakrabarty)
