Walgreens Boots Alliance Inc (NASDAQ:WBA) stock rose 1.68% (As on October 16, 11:24:14 AM UTC-4, Source: Google Finance) after the company said that it would shut 1,200 stores over the next three years as new CEO Tim Wentworth plots a turnaround at the struggling pharmacy chain operator hit by sluggish consumer spending and low drug reimbursement rates. The company narrowly beat Wall Street’s lowered estimates for fourth-quarter adjusted profit, and forecast fiscal-year earnings that were mostly in line with expectations.
Meanwhile, Pharmacy chains are facing multiple challenges as consumers avoid high-priced grocery items and pressures mount on payments they receive from pharmacy benefit managers for filling prescriptions. CEO Wentworth has unveiled a series of changes since taking on the top job last year, including the removal of multiple mid-level executives and a $1 billion cost-cutting program. Walgreens said it will close 500 stores in 2025 and focus on locations that are cash-flow negative, and underperforming stores where the lease expirations are due in the next few years. It had over 8,000 stores in the United States as of Aug. 31 last year. The restructuring of its store portfolio, including 500 closures in fiscal 2025, will be “immediately accretive” to its earnings and free cash flow.
WBA in the fourth quarter of FY 24 has reported the adjusted earnings per share of 39 cents, beating the analysts’ estimates for the adjusted earnings per share of 36 cents, according to data compiled by LSEG. The company had reported the adjusted revenue growth of 6 percent to $37.5 billion in the fourth quarter of FY 24. Operating losses doubled to $14.1 billion, reflecting a $12.4 billion non-cash impairment charge related to VillageMD goodwill, and impairment charges related to certain long-lived assets in the US retail pharmacy segment and CareCentrix goodwill. A net loss of $3 billion was recorded for the fourth quarter, up from $180 million a year ago, primarily driven by a higher operating loss, a $2.3 billion non-cash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods, and a non-cash impairment charge related to equity investment in China. Adjusted operating income was $2.6 billion this year, a decrease of 32.6%. Net cash provided by operating activities was $1.3 billion in the fourth quarter and free cash flow was $1.1 billion, a $537 million increase compared with the year-ago quarter
For fiscal 2025, Walgreens said it expects adjusted earnings of $1.40 to $1.80 per share, versus estimates of $1.73.