Walgreens booked a better-than-expected fiscal first quarter, but the drugstore chain lost $265 million as it closed U.S. stores and continued work to revive its business.
The company, beset by shrinking prescription reimbursement, rising costs and other problems, had announced in announced in October a plan to close around 1,200 locations.
Walgreens said Friday that higher costs from that plan were the main factor behind its quarterly loss.
The company didn’t detail how many stores it has closed. The chain has already shed about a thousand U.S. stores since it grew to nearly 9,500 after buying some Rite Aid locations in 2018.
Walgreens Boots Alliance Inc. also runs nearly 3,700 international stores, with locations in the United Kingdom, Mexico, Thailand and Ireland.
CEO Tim Wentworth said in a statement that the company is also working in 2025 on controlling costs and improving cash flow and prescription reimbursement.
“While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model,” he said.
In the fiscal first quarter, Walgreens recorded adjusted earnings per share of 51 cents. That excludes store closing costs. The company’s revenue grew 7.5% to $39.5 billion.
Analysts expected earnings of 38 cents per share on $37.4 billion in sales, according to FactSet.
Sales from the company’s main business, established U.S. retail pharmacies, grew more than 8%, helped by a jump in prescriptions. That countered a drop in sales for the retail area outside store pharmacies due partly to a weaker cough, cold and flu season.
The company also saw growth from a U.S. health care business it has been scaling back.
Walgreens also said Friday that it was reaffirming a forecast it made in October for fiscal 2025 adjusted earnings per share ranging between $1.40 and $1.80.
Analysts forecast earnings of $1.52 share.
Shares of the Deerfield, Illinois, company climbed in early morning trading Friday, which marks a better start than the stock had last year.
Walgreens began 2024 by cutting the quarterly dividend it pays shareholders nearly in half in order to strengthen its balance sheet and free up cash.
A month later, Walgreens was bounced from the Dow Jones Industrial Average only a few years after joining it.
Walgreens shares plunged at the start of 2024 and never recovered. The stock shed around two-thirds of its value during the year.
The Dow Jones Industrial Average, meanwhile, climbed about 13%.
On Friday, Walgreens shares climbed more than 16% to $10.71 in premarket trading.
