Walgreens stock is down 26% from a year earlier.
On Monday, Walgreens Boot Alliance reported its fiscal fourth-quarter earnings before market open. The company’s earnings and revenue beat Wall Street expectations, causing the stock to rise slightly mid-morning.
During the fiscal fourth quarter, the company’s revenue came in at $33.95 billion, as opposed to the $33.89 billion forecasted. Adjusted earnings were $1.43 per share, as opposed to forecasts of $1.41.
But even though these numbers were better than expected, Walgreens still has a long road ahead. The company continues to lay off employees and close down more stores, which has significantly affected its profitability.
Walgreens: The good, the bad, and the ugly
In addition to reporting its fourth-quarter earnings, Walgreens also gave investors a look at its fiscal year 2019 results. During the fiscal year, Walgreens’ adjusted earnings came to $5.99, which slightly beat Wall Street’s estimates of $5.97.
During the fourth quarter, the company’s retail pharmacy sales grew by 2.1%. This growth was mostly due to an increase in drug prices.
Walgreens’ comparable non-pharmacy store sales have been down recently, mostly because the company is scaling back on its tobacco products. Earlier this month, the company stopped selling e-cigarette products due to public health concerns.
Overall, investors seemed pleased with the earnings report, and the company’s shares rose slightly. Walgreens CEO Stefano Pessina said he’s proud the company was able to meet its earnings goals in spite of the “challenging operating environment.”
Can the company turn things around?
Looking ahead, Walgreens expects its revenue to be mostly flat for fiscal 2020. This stagnation is partly due to the company’s cost-cutting program, named “Save to Invest to Grow.” The company plans to cut $1.8 billion by fiscal 2022.
Walgreens plans to do this by continuing to close stores across the U.S. and the U.K. And just last week, Walgreens laid off some of its corporate employees, though the company declined to say how many people lost their jobs. According to CFO James Kehoe, this restructuring won’t affect any store positions or locations.
Walgreens has many headwinds that it needs to overcome, but the company does seem to have a plan for how it will deal with them. Time will tell whether the company’s efforts will be successful.