Walgreens Boots Alliance (WBA) shares nosedived to their lowest levels in nearly 30 years during early trading on Thursday, potentially wiping out over $5 billion in market value. The sharp decline followed the company’s announcement of a reduced full-year profit forecast and plans for a substantial, multiyear store closure initiative.
Under the leadership of CEO Tim Wentworth, Walgreens is undergoing a significant cost-cutting and business transformation. The company has reduced its regular dividend and global workforce in response to persistent high inflation and declining prescription reimbursement rates. Walgreens has already shuttered approximately 1,000 stores, including nearly 500 Boots pharmacy locations in the U.K. and around 625 outlets across the U.S.
Following its removal from the Dow Jones Industrial Average earlier this year, Walgreens disclosed plans to reduce its stake in the standalone healthcare provider VillageMD to refocus on its core retail pharmacy business, which it deems “central to the future of health care.” This shift includes a comprehensive, multiyear effort to optimize underperforming U.S. locations.
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“We are navigating a challenging operating environment, marked by ongoing pressures on U.S. consumers and recent market dynamics that have squeezed pharmacy margins,” said CEO Tim Wentworth, who took the helm in October. “Our results and outlook reflect these headwinds, despite solid performance in our International and U.S. Healthcare segments.”
Walgreens also noted an increase in theft levels, which has further impacted its financial performance.
For its fiscal third quarter ending in May, Walgreens reported earnings of 63 cents per share, a 37% drop from the same period last year and below Wall Street’s expectations of 68 cents. However, the company’s revenue of $36.4 billion exceeded forecasts, with U.S. retail pharmacy sales rising by 2.3% to $28.5 billion.
The company has revised its full-year profit guidance to a range of $2.80 to $2.95 per share, a reduction of 40 cents from its March forecast.
As of early Thursday trading, Walgreens shares were down 24.6%, trading at $121.81, marking their lowest level in over two decades.
Source: finance.yahoo
