Walgreens Boots Alliance (WBA) said on Tuesday it would shut 1,200 stores over the next three years as new CEO Tim Wentworth plots a turnaround at the struggling pharmacy chain operator hit by sluggish consumer spending and low drug reimbursement rates.
Walgreens stock rose 7% before the bell on Tuesday.
The company also narrowly beat Wall Street's lowered estimates for fourth-quarter adjusted profit, and forecast fiscal-year earnings that were mostly in-line with expectations.
Pharmacy chains are facing their most turbulent time in recent history as consumers avoid high-priced grocery items and pressures mount on payments they receive from drug middlemen for filling prescriptions.
As a result, Walgreens' stock is trading near 30-year lows and down 65% this year, making it the worst performing stock on the S&P 500 index.
CEO Wentworth has unveiled a series of changes since taking on the top job last year, including the removal of multiple mid-level executives and a $1 billion cost-cutting program.
"This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term," said Wentworth in a statement.
The closures were announced in June but the company had not disclosed the number of affected stores at that time. It had over 8,000 stores in the United States as of Aug. 31 last year.
In the fourth quarter of its fiscal year 2024, Walgreens said it recorded impairment charges on the goodwill of home care provider CareCentrix and equity investment in China.
Excluding those items and other charges, the company earned 39 cents per share on an adjusted basis. Analysts had expected a profit of 36 cents per share, according to data compiled by LSEG.
Comparable retail sales fell 1.7%, hurt by "a challenging retail environment". Sales of groceries and other items at Walgreens stores have been hit as consumers increasingly hunt for bargains and shun higher-priced items.
For fiscal 2025, Walgreens said it expects adjusted earnings of $1.40 to $1.80 per share, versus estimates of $1.73 per share.
(Reporting by Manas Mishra in Bengaluru; Editing by Saumyadeb Chakrabarty)