Walgreens Boots Alliance Beats Estimates, But Future Remains Uncertain
Walgreens Boots Alliance (WBA) surprised Wall Street with its impressive first-quarter fiscal year 2025 results, exceeding expectations on adjusted earnings per share and sales. The company reported a revenue of $39.5 billion, a 7% increase from the same quarter last year, surpassing Bloomberg consensus estimates of $37.3 billion. Additionally, WBA’s adjusted earnings per share of $0.51 outperformed consensus estimates of $0.38 per share.
A Shift in Strategy
Under the leadership of CEO Tim Wentworth, who took the reins in late 2023, Walgreens has been undergoing a significant transformation. The company has been focusing on its core business, separating its VillageMD healthcare services unit, which has been a drag on its financial performance. VillageMD, along with Shields, the company’s pharmacy benefits manager, reported a loss of $325 million, an improvement from the previous period’s $436 million loss.
Evaluating Options
Walgreens is still assessing its options for New Jersey-based Summit Health and CityMD urgent care centers, acquired as part of the VillageMD controlling stake in 2021. The company has faced numerous challenges, including a tough retail environment, which led to a round of store closures. However, WBA is committed to its vision of a retail pharmacy-led organization, with a focus on improving the store experience.
Enhancing the Customer Experience
To achieve this, Walgreens has introduced a digital waiting list for prescription pick-up, allowing customers to shop while they wait. The company has also grouped products by category, such as women’s health, to better meet customers’ needs. These initiatives aim to drive sales and improve the overall customer experience.
Store Closures and Turnaround Efforts
Walgreens is in the process of closing around 450 underperforming stores, with 67 already shut down as of the first quarter. CEO Wentworth emphasized the company’s commitment to its turnaround efforts, acknowledging that it will take time, discipline, and focus to achieve its goals.
Private Discussions Ongoing
While analysts did not broach the topic of Walgreens going private during the earnings call, discussions are reportedly ongoing with Sycamore Partners. As the company navigates its future, one thing is clear: Walgreens is determined to emerge stronger and more focused on its core business.
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