Shares of Walgreens Boots Alliance Inc. (WBA) took a 2.9% dive in premarket trading on Thursday, following the company’s disappointing fiscal fourth-quarter results and downbeat outlook.
Narrowed Net Losses but Lower Adjusted Earnings per Share
Walgreens reported net losses of $180 million, or 21 cents per share, for the quarter ending August 31. This is a significant improvement from the year-ago period when the company recorded losses of $415 million, or 48 cents per share. However, after excluding nonrecurring items, the adjusted earnings per share fell 17% to 67 cents, which missed the FactSet consensus of 69 cents.
Sales Exceed Expectations
On the positive side, Walgreens’ sales grew 9.2% to reach $35.42 billion, surpassing the FactSet consensus of $34.80 billion. The growth was driven by a 3.7% increase in U.S. retail pharmacy sales, a 12.4% increase in international sales, and a significant 217% jump in U.S. healthcare sales due to recent acquisitions.
Steps Taken to Align Cost Structure
To address the performance gap, Walgreens has implemented several measures to align its cost structure with its business goals. These measures include planned cost cuts of $1 billion and lowered capital expenditures by $600 million. The company expects to see the impact of these actions in fiscal 2024, starting in the second quarter.
Downbeat Outlook for Fiscal 2024
Despite the cost-saving efforts, Walgreens’ interim Chief Executive Officer, Ginger Graham, provided a downbeat outlook for fiscal 2024. The company anticipates adjusted earnings per share of $3.20 to $3.50, which is below the FactSet consensus of $3.71.
Stock Performance
Over the past three months, Walgreens’ stock has experienced a significant decline of 25.5%, while the Dow Jones Industrial Average decreased by 1.6%.
In conclusion, Walgreens Boots Alliance Inc. faced disappointing fiscal fourth-quarter results and provided a downbeat outlook for fiscal 2024. The company’s efforts to align its cost structure and improve performance will be closely monitored by investors in the coming quarters.
