Walgreens cuts profit view, looks to shut more stores as spending slows

FILE PHOTO: Pigeons are seen resting on signage for Walgreens, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City, U.S., November 26, 2021. REUTERS/Andrew Kelly/File Photo

By Bhanvi Satija and Sneha S K

(Reuters) -Walgreens Boots Alliance cut its profit forecast for fiscal 2024 on Thursday and said it would close more underperforming U.S. stores as weak consumer spending hurts its retail operations, dragging its shares down 15% premarket.

Without specifying the number of closures, the pharmacy chain operator said it was finalizing a "significant multi-year" program to close some of its more than 8,700 stores, with its review focused on a quarter of its U.S. locations.

Investors are banking on CEO Tim Wentworth, who came on board last October, to steer strategy and cost-saving efforts at Walgreens, as the drugstore operator struggles with declining demand at its retail operations and weak COVID product sales.

"We are focused on improving our core business: retail pharmacy, which is central to the future of healthcare," Wentworth said in a statement.

"Many of these actions will take time, but I am confident that we have the right team and the right strategy to lead a business turnaround for the Walgreens that our customers and patients need."

The company expects the challenging pharmacy industry environment and sluggish consumer spending to persist into fiscal 2025. The forecast cut also weighed on rival CVS Health's stock , sending it 2.7% lower before the bell.

Walgreens is also aiming to simplify its U.S. healthcare portfolio that includes primary care provider VillageMD. Wentworth told the Wall Street Journal that the company will no longer be VillageMD's majority owner.

As of February 2024, Walgreens had closed 484 stores in the UK and 625 stores in the U.S., according to a regulatory filing.

The company forecast an adjusted profit of $2.80 to $2.95 per share for its financial year ending August, lower than the $3.20 to $3.35 per share range it announced in March.

Analysts expect an annual profit of $3.20 per share, according to LSEG data.

Walgreens reported adjusted earnings of 63 cents per share for the third quarter, compared with estimates of 68 cents.

(Reporting by Bhanvi Satija, Christy Santhosh and Sneha S K in Bengaluru; Editing by Devika Syamnath)