Walgreens Boots Alliance said Tuesday that new Chief Executive Officer Tim Wentworth is looking to turn around the pharmacy chain, which has struggled with weak consumer spending and low drug reimbursement rates. The company announced that it would close 1,200 stores within the year.
The company also narrowly beat Wall Street’s lower expectations for fourth-quarter adjusted earnings, and its full-year profit forecast was also roughly in line with expectations. The company’s shares jumped 5.4% to $9.50 in pre-market trading.
“At first glance, (the outlook) looks better than the worst-case scenario,” said Michael Cherney, an analyst at Leerink Partners, adding that Walgreens’ macro outlook remained unabated this quarter. He added that he continues to be plagued by challenges.
Pharmacy chains are facing multiple challenges as consumers shun expensive groceries and pressure increases on the payments they receive from drug intermediaries to fill prescriptions.
As a result, Walgreens stock is trading near 30-year lows this year, down 65% this year, making it the worst-performing company in the S&P 500 index.
Wentworth has unveiled a series of changes since taking the top job last year, including the firing of several mid-level executives and a $1 billion cost-cutting program.
“While this turnaround will take time, we are confident that the long-term benefits will be significant both economically and for consumers,” Wentworth said in a statement.
The closures were announced in June, but the company did not say at the time how many stores were affected. As of August 31 of last year, it had more than 8,000 stores in the United States.
