Walgreens Boots Alliance (NASDAQ: WBA) saw its stock climb over 3% on Thursday despite reporting a substantial $5.9 billion quarterly net loss, as investors focused on better-than-expected sales and the company's strategic repositioning efforts.
The pharmacy retail giant posted second-quarter revenue of $37.1 billion, exceeding analyst estimates of $35.86 billion and marking a 6.3% increase compared to the same period last year. The revenue growth was primarily driven by strong pharmacy services performance, with comparable pharmacy sales rising 8.7%.
However, the company recorded a massive $5.8 billion non-cash impairment charge related to its VillageMD acquisition, resulting in a quarterly loss of $6.85 per share. On an adjusted basis, excluding one-time items, earnings per share reached $1.20, showing a 3.4% improvement year-over-year.
Under the direction of new CEO Tim Wentworth, Walgreens announced plans to close more than 160 VillageMD clinics to concentrate operations in high-population areas. The company also initiated a comprehensive strategic portfolio review expected to conclude within three months.
The retail segment continued to face headwinds, with comparable retail sales declining 4.3% compared to last year. Meanwhile, the International segment demonstrated strength, with sales growing 6.6% to reach $6.0 billion.
In response to ongoing retail challenges, Walgreens narrowed its fiscal 2024 adjusted earnings guidance to $3.20-$3.35 per share, down from the previous range of $3.20-$3.50. The company maintains its commitment to achieving $1 billion in cost savings during the current fiscal year.
The market's positive reaction suggests investors are encouraged by the company's aggressive restructuring efforts and strong pharmacy services growth, despite near-term challenges in the retail environment.