By Bhanvi Satija and Sneha S Okay
(Reuters) – (This June 27 story has been corrected to drop a reference to Walgreens closing 700 shops within the U.S. because the quantity was already reported, within the headline and paragraph 1, and to take away the second paragraph that had references to the corporate closing Boots shops and taking a associated cost as the data had already been reported)
Walgreens Boots Alliance (NASDAQ:) reduce its revenue forecast for fiscal 2024 and mentioned it could shut underperforming U.S. shops as weak shopper spending hurts retail operations.
The pharmacy operator’s CEO, Tim Wentworth, who got here on board final October, had set in movement a whole overhaul at Walgreens via retailer closures, the removing of a number of mid-level executives and a $1 billion cost-cutting plan.
Walgreens had additionally halved its dividend to 25 cents per share earlier this 12 months in an try and preserve money as sticky inflation dampens spending on over-the-counter merchandise and reimbursement funds for filling prescriptions come underneath strain.
“The outcomes this morning have been simply completely horrible. I imply, it is sort of been the theme over the past three to eight earnings reviews to be brutally trustworthy,” mentioned David Wagner, portfolio supervisor and fairness analyst at Aptus Capital Advisors.
“They introduced in new CEO Tim Wentworth and he has a very good historical past on the healthcare providers facet”, however buyers are targeted on his subsequent steps, mentioned Wagner, whose agency owns 241,583 Walgreens shares via a unit.
Walgreens expects these challenges to persist into fiscal 2025 and is open to reviewing extra retailer closures.
“We’ve got a very sturdy stage of conviction across the core enterprise (retail pharmacy) that we’re transforming right here” and the modifications will take just a few “quarters … and never essentially a number of years”, Wentworth mentioned.
Walgreens will even simplify its U.S. healthcare portfolio that features main care supplier VillageMD. Wentworth advised the Wall Avenue Journal the corporate will not be VillageMD’s majority proprietor.
It is going to, nonetheless, proceed investing in its Boots UK and Shields pharmacy companies.
As of Might 31, Walgreens had closed 581 shops within the UK and 673 shops within the U.S., in line with a regulatory submitting.
The corporate forecast an annual adjusted revenue of $2.80 to $2.95 per share, decrease than its earlier estimate of $3.20 to $3.35. Analysts count on $3.20 per share, in line with LSEG information.