Walgreens’ turnaround strategy, VillageMD sales increase in 2025 Q1

Walgreens Boots Alliance (WBA) beat Wall Street estimates on its adjusted earnings per share and sales for the first quarter of fiscal year 2025 on Friday, even as questions remain about its future as a public company.

The company reported $39.5 billion in revenue for the quarter, up 7% from the same quarter last quarter and above the Bloomberg consensus estimate of $37.3 billion. Walgreens also reported adjusted earnings per share of $0.51, compared to consensus estimates of $0.38 per share.

The company saw lower-than-expected sales of seasonal flu vaccines and medications for sale, as the winter respiratory virus season was not as bad as in previous years.

The stock traded higher on Friday, up 27% to $11.70 per share, on news that the company is moving forward with its spin-off of the VillageMD health services business. Walgreens has been pursuing a change in strategy since CEO Tim Wentworth took over at the end of 2023.

VillageMD performed poorly, resulting in an operating loss on Walgreens’ books. This quarter he did a little better, along with the company’s pharmacy benefits manager, Shields. Together, they reported a loss of $325 million, compared with a loss of $436 million in the previous period.

The company is still evaluating what to do with urgent care centers Summit Health and CityMD in New Jersey, which were also part of the acquisition of a controlling stake in VillageMD in 2021.

The company has faced a number of pressures, which have spurred a round of store closures in a tough retail environment. Front-of-store sales have typically been a drag on retail pharmacies in recent years as customers pivot to buy online and through other avenues.

Wentworth highlighted some improvements to the store experience, including a digital waiting list for prescription pickup to help customers avoid taking up pharmacists’ time while trying to fill prescriptions.

Wentworth said this will allow customers a chance to shop while they wait. If they do, customers will face product groupings; for example, some may focus on women’s health. It’s a way to meet the needs of customers where they are, he said.

Walgreens is still in the process of closing about 450 underperforming stores, 67 of which were closed as of the first quarter.

“This turnaround — we said it’s going to take time … and we’re committed to our vision of a retail pharmacy-led organization,” Wentworth said during an earnings call Friday, noting that there is a “level of urgency, discipline, and focus” throughout the organization.

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