Walgreens reported a loss of $3 billion in the fourth quarter and plans to close 1,200 stores over the next three years as part of the retail drugstore chain’s ongoing turnaround strategy amid a rocky fiscal 2024.
The company will close 500 stores next year as it works to improve its cash flow. The closure “will be immediately accretive to adjusted EPS and free cash flow,” the company said in its quarterly earnings report released Tuesday
The company’s shares jumped 16% Tuesday morning as it’s fourth-quarter earnings still beat analysts expectations.
The company reported a net loss of $3 billion, or a loss of $3.48 per share, in its fiscal fourth quarter ended August 31 compared to a net loss of $180 million, or 21 cents per share, during the same quarter a year ago, Walgreens reported Tuesday morning.
Walgreens said the loss was “primarily driven by a higher operating loss, a $2.3 billion$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.”
Walgreens’ fourth-quarter sales and profit beat Wall Street’s expectations, as the company makes progress in its cost-cutting efforts.
The company’s adjusted earnings per share in the fourth quarter was 39 cents and revenue was up 6% to reach $37.5 billion. Wall Street analysts expected earnings per share of 36 cents and revenue of $35.76 billion, according to a survey of analysts by LSEG.
“Our financial results in the fiscal fourth quarter and full year 2024 reflected our disciplined execution on cost management, working capital initiatives and capex reduction. In fiscal 2025, we are focusing on stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow, and continuing to address reimbursement models to support dispensing margins and preserve patient access for the future,” said Tim Wentworth, chief executive officer, Walgreens Boots Alliance, in a statement.
“Fiscal 2025 will be an important rebasing year as we advance our strategy to drive value creation. This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” Wentworth said.