For Walgreens Boots Alliance, Inc. (NASDAQ: WBA), 2024 was a challenging year as it lost market share to competitors and closed several stores amid persistent operational headwinds. It is expected that the retail pharmacy giant’s upcoming earnings will shed light on its financial health and the management’s turnaround efforts.
Walgreens hasn’t offered its shareholders anything to cheer about for a long time. The stock has been languishing in a downward spiral and slipped into single-digit territory in recent months. The last closing price is below the long-term average price of $14.46. The stock lost a dismal 65% in 2024. While WBA is expected to regain momentum in the coming weeks, experts are cautious in their recommendations.
On average, analysts following the healthcare company expect revenues of $37.37 billion for the November quarter, representing a 1.81% year-over-year increase. First-quarter net income, adjusted for one-off items, is projected to decline to $0.40 per share from $0.66 per share in the same period last year. The report is expected to be published on Friday, January 10, at 7:00 am ET. The Walgreens leadership expects full-year adjusted earnings per share to be in the range of $1.40 to $1.80.
A Rough Patch
Walgreens has been facing multiple problems for some time, forcing the management to adopt critical measures to improve operational efficiency and set the stage for a turnaround. The changing retail pharmacy landscape and inflation-related pressure on consumer spending remain the main challenges to the pharmacy business. The company is working to reduce its large debt while implementing its retail strategy and taking steps to enhance margins. In the last fiscal year, it achieved the declared goals of cutting costs by over $1 billion, significantly reducing capital spending, and realizing benefits from working capital initiatives.
“We have over 8,000 stores, of which the majority, approximately 6,000 are profitable. This solid base supports our conviction in a retail pharmacy-led model that is relevant to our consumers, and we intend to invest in these stores over the next several years. Part of the funding for this investment will come from accelerating the closure of underperforming stores. We expect to close approximately 1,200 of those over the next three years and reduce the fixed costs associated with them,” said Walgreens’ CEO Tim Wentworth at the Q4 2024 earnings call.
Q4 Outcome
Walgreens reported a 6% annual growth in total sales to $37.5 billion in the final three months of fiscal 2024, beating estimates. Sales of the US Retail Pharmacy segment, which accounts for 79% of the total, grew by 7%. International sales and US Healthcare sales grew by 3% and 7%, respectively. Fourth-quarter profit, excluding special items, dropped 41% year-over-year to $0.39 per share but topped expectations. On an unadjusted basis, the company reported a net loss of $3.0 billion or $3.48 per share for Q4, compared to a loss of $180 million or $0.21 per share in the year-ago quarter.
On Thursday, Walgreens’ stock opened below $10 and traded slightly higher in the early hours of the session. The value has more than halved in the past eight months.