Walgreens (WBA) Q1 2025 Earnings

People make their way near a Walgreens pharmacy in New York City on March 9, 2023.

Leonardo Munoz | Corbis news | Getty Images

Walgreens on Friday reported fiscal first-quarter earnings and sales that beat expectations as the company closes stores and cuts other costs to emerge from the difficult situation.

Here's what Walgreens reported for the three-month period ended Nov. 30, compared to Wall Street's expectations based on an LSEG analyst survey:

• Earnings per share: 51 cents adjusted versus 37 cents expected
• Revenue: $39.46 billion versus expected $37.36 billion

Even after the big price losses, Walgreens stuck to its adjusted earnings forecast for the 2025 fiscal year of $1.40 to $1.80 per share. The company did not provide annual revenue guidance in its press release. In October, Walgreens said it expected revenue of $147 billion to $151 billion for the fiscal year.

The company's shares rose 27% on Friday.

“We began the fiscal year making progress toward our financial and strategic priorities despite the challenging situation for our consumers,” Walgreens CEO Tim Wentworth said during an earnings conference call Friday.

“Importantly, we have begun to capitalize on the opportunities we view as essential to our longer-term turnaround,” he said, adding that the “cornerstone” of those efforts was stabilizing the U.S. retail pharmacy business.

Walgreens capped a difficult past year marked by pharmacy reimbursement pressures, weaker consumer spending at its stores and challenges related to its push into primary care, among other things. The results come amid reports that the company is in talks to sell itself to private equity firm Sycamore Partners.

In the fiscal first quarter, Walgreens posted revenue of $39.46 billion, up 7.5% from the same period last year, as its three business segments grew.

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 due to higher operating losses reflecting its multi-year plan to close underperforming stores. This includes 1,200 over the next three years, including 500 in the 2025 financial year alone.

According to its website, Walgreens has approximately 8,500 retail pharmacies in the United States. The company expects to “significantly increase the pace of our store closures compared to the first quarter,” Wentworth said.

Excluding certain items, adjusted earnings for the quarter were 51 cents per share.

Aside from the store closures, Wentworth said Walgreens is “refining the way we forecast, allocate and schedule workforces” across its stores. The company is rolling out a new scheduling model at around 200 locations in January to improve the shopping experience for customers, patients and employees.

The changes would involve scheduling work based on store-specific demand patterns, while also taking into account team member availability and preferences, he said.

However, Wentworth noted that turning around the consumer retail business “has become more difficult due to the continued deterioration in consumer discretionary spending.” Buyers were pressured by inflation and higher interest rates and continued to exhibit value-oriented behavior, Wenworth said.

“We are advancing a number of elements of our retail strategy,” he said. “Although we are seeing the first green shoots, we still have a lot of work to do here.”

Growth across all business areas

Walgreens reported growth across its three business segments in the fiscal first quarter.

The company's U.S. pharmacy division generated revenue of $30.87 billion, up 6.6% from the same period last year. Analysts had expected sales of $29.21 billion, according to StreetAccount estimates.

This unit operates the Company's drugstores, which sell prescription and over-the-counter medications, as well as health and wellness, beauty, personal care and grocery products.

Walgreens said pharmacy sales increased 10.4% and comparable pharmacy sales increased 12.7% in the quarter compared to the same period last year, due in part to price inflation for brand-name drugs.

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Total prescriptions filled in the quarter, including vaccines, were 316.3 million, up 1.5% from the same period last year. Retail sales fell 6.2% compared to the same quarter last year, and comparable retail sales fell 4.6%. The company cited a weaker cough, cold and flu season as well as lower sales in discretionary product categories.

Revenue from the company's U.S. healthcare division jumped to $2.17 billion in the fiscal first quarter, up more than 12% from the same period last year. Analysts had expected sales of $2.09 billion, according to StreetAccount estimates.

This reflects, in part, the growth of primary care provider VillageMD and specialty pharmacy company Shields Health Solutions. Specialty pharmacies are designed to supply medications with unique handling, storage and distribution requirements, often for patients with complex medical conditions.

Walgreens' international unit, which operates more than 3,000 retail stores abroad, had sales of $6.43 billion in the fiscal first quarter. This is an increase of 10.2% compared to the same period last year.

Analysts expected revenue of $5.85 billion for the period, according to StreetAccount.

The company said sales at its UK-based drugstore chain Boots rose 4.5%.

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