Walgreens Q3 beats Street, but U.S. retail sales continue to fall
Walgreens Boots Alliance reported third-quarter sales and adjusted earnings that beat estimates amid ongoing cost-savings efforts that help offset weak U.S. front-end sales.
The pharmacy giant did not provide fiscal 2025 guidance as it awaits the completion of its $10 billion acquisition by private-equity firm Sycamore Parners. The transaction, which will take Walgreens private, is expected to close in the fourth quarter.
Walgreens had a net loss of $175 million, or $0.20 per share, for the quarter ended May 31, compared to net income of $344 million, or $0.40 a share, in the year-ago quarter. Adjusted earnings were $0.38 per share, topping analysts’ estimates of $0.33 a share, but down from $0.63 a share in the same period last year. The company attributed the decline to a higher adjusted effective tax rate, higher incentive accruals, lower equity earnings in drug distributor Cencora and lower U.S. retail sales
Revenue rose 7.2% to $38.99 billion from $36.35 billion, topping estimates of $36.84 billion. U.S. retail pharmacy sales rose to $30.72 billion from $28.5 billion. It was the ninth-straight quarter of year-over-year growth. Pharmacy sales rose 11.8%, and retail sales fell 5.3%. Comparable retail sales were down 2.4%.
U.S. healthcare-segment sales fell to $2.1 billion from $2.13 billion. The decline in sales was primarily driven by VillageMD sales decreasing 6.5 percent, reflecting lower risk-based and fee-for-service revenue, including the impact of clinic closures
International revenue rose 7.8% to $6.17 billion. Boots UK sales rose 5%. Boots UK comparable pharmacy sales increased 5.4%; comparable retail sales rose 6%.
[READ MORE: Walgreens to close 1,200 stores, including 500 in FY25]
“Third quarter results reflect continued improvement in our U.S. Healthcare segment and benefits from our cost savings initiatives, while we continued to see weakness in our U.S. front-end sales,” said CEO Tim Wentworth. “We remain focused on our turnaround plan, which will require time, disciplined focus and a balanced approach to manage future cash needs with investments necessary to navigate an evolving pharmacy and retail environment.”
