Shares of Walgreens Boots Alliance were rising sharply after the retail pharmacy chain beat quarterly estimates and announced coming store closures.
Walgreens stock gained 5% to $9.45 in premarket trading Tuesday, while futures tracking the S&P 500 were flat.
For its fourth fiscal quarter ended Aug. 31, the company reported adjusted earnings of 39 cents per share, beating Wall Street's call for 36 cents, according to FactSet.
Net sales of $37.5 billion beat the consensus call for $35.8 billion.
"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 CEO Tim Wentworth in the earnings release.
For fiscal 2025, Walgreens forecast adjusted earnings of $1.40 to $1.80 per share, and sales of $147 billion to $151 billion. Analysts had penciled in earnings per share of $1.72 on sales of $147.6 billion, respectively.
The company also announced a footprint-optimization program targeting the closure of about 1,200 stores over the next three years, including about 500 closures in fiscal 2025, "which will be immediately accretive to adjusted EPS and free cash flow."
Through Monday's close, the stock has fallen 66% this year, even as the S&P 500 has gained 23%.
Walgreens Boots Alliance earnings are due before Tuesday's open -- and it isn't clear what CEO Tim Wentworth can say to turn around the stock.
Shares of the struggling drugstore chain have had a tough go of it of late. Walgreens stock has dropped 66% this year alone, even as the S&P 500 has gained 23%.
Walgreens' earnings shouldn't do much to change the trajectory. The company is expected to report a fiscal fourth-quarter profit of 36 cents a share, down from 67 cents during the same quarter the year before, on sales of $35.8 billion, up from $35.4 billion.
But Walgreens has "a LOT of moving pieces," according to Leerink analyst Michael Cherny. Next year's guidance is expected to come in at $1.72, down from 2024's expected $2.85, but the analyst thinks it will come in at $1.49. The company is also likely to be pressured by the low-end consumer if Dollar General's earnings and Big Lots' bankruptcy are anything to go by, as well as the loss of market share to Target and Walmart. The cost of financing could also increase, which would also be a headwind to future earnings, Cherny writes.
Investors will be listening for plans from CEO Wentworth, who took over nearly one year ago. Edward Jones analyst John Boylan notes that while Walgreens makes changes, including by selling higher-margin items, reducing costs, and adding more "in-store clinics and other patient care services," it "likely will take time to develop and execute on [Wentworth's] vision for the company."
