Walgreens Boots Alliance (WBA) -) shares were active in early Thursday trading after the pharmacy benefits manager and retailer posted weaker-than-expected fiscal-fourth-quarter earnings and issued a muted outlook for near-term profits.
Shares were given a early Thursday boost, however, after it unveiled aggressive cost cuts and noted that AI technologies could help streamline some of its supply chain.
Walgreens Boots said adjusted earnings for the three months ended in August came in at 67 cents, down 18.8% from the year-earlier period and 2 cents shy of the Wall Street consensus forecast.
Group revenue rose 9.2% from a year earlier to $35.42 billion, ahead of analysts' forecasts of a $34.62 billion tally, as U.S. same-store pharmacy sales rose 5.7%.
Looking into the current fiscal year, Walgreens said it sees adjusted earnings in the region of $3.20 to $3.50 per share, compared with a Wall Street forecast of around $3.70, and noted it would not provide an outlook into 2025 and beyond.
“Our performance this year has not reflected WBA’s strong assets, brand legacy, or our commitment to our customers and patients," said interim CEO Ginger Graham.
"In just six weeks, we have taken a number of steps to align our cost structure with our business performance, including planned cost reductions of at least $1 billion, and lowered capital expenditures by approximately $600 million."
"We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter," she added. "We are also intently focused on accelerating our profitability in the U.S. health-care segment."
The group will also start its 2024 fiscal year with a new CEO, following the abrupt departure of Rosalind Brewer last month. Taking the helm will be industry veteran Tim Wentworth, who was named to the top post late Tuesday.
Walgreens Boots Alliance shares, a Dow component, were marked 4.1% higher in early trading following the earnings release to change hands at $23.54 each, a move that would leave the stock down nearly 35% since the start of the year.
- Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
