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Walgreens forecasts weak annual profit as COVID sales shrink

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LA Post: Walgreens forecasts weak annual profit as COVID sales shrink
October 12, 2023
Reuters

(Reuters) - Walgreens Boots Alliance forecast financial year 2024 profit below Wall Street's expectations on Thursday after the pharmacy operator missed quarterly earnings estimates due to lower consumer spending and a sharp drop in sales of COVID-19 products.

Walgreens' lower forecast comes at a time when the company is facing multiple challenges, like persistently weak prescription drug demand, reported walkouts by its pharmacy staff and a shift in focus towards integrated health services.

It has also contended with weak sales of its consumer health products due to persistently high inflation.

The company reported a 4.3% fall in U.S. retail sales and a 0.5% decline in total prescriptions filled, including vaccinations, in the fourth quarter.

"Our performance this year has not reflected WBA's strong assets, brand legacy, or our commitment to our customers and patients," Interim CEO Ginger Graham said in a statement.

Walgreens announced a planned cost reduction of at least $1 billion and lowered capital expenditure by about $600 million. It also named Tim Wentworth, a former Cigna executive, as permanent CEO on Tuesday.

With its core business weakened, Walgreens had said in June it would close its stores at 150 locations in the United States. It said it expects a lower contribution from sales and leasebacks of its stores this financial year.

However, its fledging U.S. healthcare services business will break even on an adjusted operating profit level in the current financial year, the company said.

The second-largest U.S. pharmacy chain operator, whose financial year ends in August, forecast an annual adjusted profit of $3.20 to $3.50 per share, compared to analysts' average estimate of $3.72 per share, according to LSEG data.

Excluding items, the company reported earnings of $0.67 per share for the quarter, compared to an average analysts' estimate of $0.69 per share, according to LSEG data.

Walgreens' shares were up nearly 1% in premarket trade.

(Reporting by Khushi Mandowara and Leroy Leo in Bengaluru; Editing by Pooja Desai)

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