Walgreens swings to a profit, raises forecast as it looks to accelerate growth under new CEO

Walgreens Boots Alliance raised its outlook for the year and laid out its strategy to drive growth in the future on Thursday, after a stronger than expected fiscal third-quarter.

The drugstore chain said it now anticipates about 10% growth in adjusted earnings per share for the year, due to its rebounding sales and the boost it has gotten from Covid-19 shots. It had previously forecast growth in the mid-to-high single digits. So far, the company said it has administered more than 25 million vaccines and begun offering walk-in and same-day appointments.

Shares were up more than 2% in premarket trading.

The company is in the midst of a turnaround led by its new CEO Roz Brewer, the former chief operating officer of Starbucks. On Thursday, it shared more details about its strategic priorities. Among them, the drugstore chain said it would turn itself into a neighborhood health destination as it opens primary care clinics with VillageMD at hundreds of its stores and will expand the use of automation, so pharmacists have more time to answer customers’ health-care questions. It said it also plans to focus on digital, so more people use its app and get personalized offers to inspire purchases. And it said it will continue to work toward reducing annual costs by more than $2 billion by next fiscal year.

“This quarter’s results demonstrate continued momentum, and while challenges lie ahead, we are in a strong position to grow and innovate our core retail and pharmacy businesses for the future,” Brewer said in a press release.

Here’s what Walgreens reported compared with what analysts were expecting for the third quarter ended May 31, based on Refinitiv data:

• Earnings per share: $1.51 adjusted vs. $1.17 expected
• Revenue: $34.03 billion vs. $33.76 billion expected

In the quarter, Walgreens posted a net profit of $1.20 billion, or $1.38 per share, compared with a net loss of $1.71 billion, or $1.95 per share, a year earlier.

Excluding items, the company earned $1.51 per share, higher than the $1.17 expected by analysts surveyed by Refinitiv.

Sales rose to $34.03 billion from $30.36 billion a year earlier, exceeding the $33.76 billion that analysts expected.

As of Wednesday’s close, Walgreens shares are up about 32% so far this year. Shares closed Wednesday up 1.19% to $52.61. The company’s market value is $45.48 billion.