Walgreens Boots Alliance forecast financial year 2024 profit below estimates after the pharmacy operator missed Wall Street's expectations for quarterly earnings due to lower consumer spending and a sharp drop in sales of COVID-19 tests and vaccines.
Walgreens' lower forecast comes at a time when the company tackles 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.
Planned Cost Reduction
Walgreens announced a planned cost reduction of at least $1 billion and lowered capital expenditure by about $600 million. It has also named Tim Wentworth, a former Cigna executive, as permanent CEO.
Interim chief executive officer Ginger Graham added, "We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter. We are also intently focused on accelerating our profitability in the US Healthcare segment."
The second-largest US 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 average analysts' estimate of $0.69 per share, according to LSEG data.
Annual Performance
Sales in full-year 2023 amounted to $139.1 billion, up 4.8% from the year-ago period and an increase of 5.6% on a constant currency basis.
The performance reflects sales growth in its US Retail Pharmacy and international segments, and sales from the US Healthcare segment.
Operating loss was $6.9 billion compared to operating income of $1.4 billion in full-year 2022, while adjusted operating income was $3.9 billion, down 24.1% on a constant currency basis.
Article by Reuters, additional reporting by ESM.
