Walgreens (WBA) earnings Q4 2023

Walgreens on Thursday offered soft profit guidance and reported fiscal fourth-quarter earnings that fell short of expectations, as demand for Covid vaccines and tests sinks in the U.S. 

The retail pharmacy giant – squeezed by the transition out of the Covid pandemic, a leadership shake-up, its wobbly push into health-care and recent labor pressure from pharmacy staff – has now underperformed Wall Street’s adjusted earnings expectations for two straight quarters. 

The last time Walgreens posted a consecutive earnings miss was nearly a decade ago.

Still, it posted narrower losses and reported sales growth in its health care business, which is now central to the company’s business strategy.

The quarterly results came two days after Walgreens named health-care industry veteran Tim Wentworth as its new CEO following the abrupt departure of the company’s former top executive, Roz Brewer, last month. Wentworth, who will take over on Oct. 23, is tasked with steering the retail pharmacy giant out of a rough spot. 

“I have worked with Walgreens as a customer partner, competitor investor and family member, and I understand the challenges ahead for us,” Wentworth, the former CEO of Cigna‘s pharmacy benefits management company, said during the earnings call Thursday.

Shares of Walgreens were slightly higher during early trading Thursday. The stock had been down more than 39% for the year heading into the open. 

The company said it expects adjusted earnings per share of $3.20 to $3.50 in the coming fiscal year, which is lower than analysts’ estimate of $3.72. Walgreens expects lower Covid-related sales, along with a higher tax rate and lower sale and leaseback contributions, to offset earnings growth. 

Walgreens also sees revenue for the year at $141 billion to $145 billion. Wall Street analysts estimated sales of more than $144 billion.

“We see a continuation of the challenging trends that impacted us in 2023,” interim CFO Manmohan Mahajan said during an earnings call Thursday, noting that the company is “adopting a prudent approach.”

Mahajan added that Walgreens expects to see a higher level of shrink, or lost inventory, in the upcoming fiscal year, which has been increasing for the company over the last several months and continues to represent a serious systemic issue across the retail industry.

But Interim CEO Ginger Graham noted during the call that the company expects over $1 billion in savings during the next fiscal year due to its ongoing cost-cutting initiative, which involves closing unprofitable stores and using AI to drive supply chain efficiencies, among other efforts.

Here’s what Walgreens reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: 67 cents adjusted vs. 69 cents expected
• Revenue:…