Shares of Walgreens Boots Alliance Inc. experienced a significant drop on Thursday following the release of its earnings report, plummeting to levels not seen since 1997.
The company attributed the decline to persistent pressures on the US consumer and adverse marketplace dynamics that have negatively impacted pharmacy margins.
Earnings report and store closures
CEO Tim Wentworth highlighted the challenging operating environment, which has forced Walgreens to make substantial adjustments.
As part of its strategic response, the company plans to close approximately 8,600 stores across the United States.
This move is intended to streamline operations and mitigate the financial pressures currently facing the pharmacy chain.
Revised earnings guidance
In light of these challenges, Walgreens has revised its earnings guidance for 2024. The company now expects earnings per share to be between $2.80 and $2.95, reflecting the difficult market conditions and strategic shifts being implemented.
This downward revision underscores the ongoing struggles within the retail pharmacy sector, exacerbated by broader economic uncertainties.
Market reaction
The announcement had an immediate impact on Walgreens’ stock price. At 9:44 am ET, shares had dropped by 23.31%, trading at $12.01.
This sharp decline highlights investor concerns about the company’s ability to navigate the current market landscape and achieve its revised financial targets.
Walgreens Boots Alliance faces a challenging road ahead as it contends with persistent market pressures and adapts its business strategy to improve profitability.
The planned store closures and revised earnings guidance indicate a significant shift in the company’s operations, aimed at stabilising its financial performance amidst a tough economic environment.
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