Walgreens’ shares fall 5% on earnings miss as pharmacy chain grapples with more competition

Health, Fitness & Food

Pedestrians walk past a Walgreens store in New York.

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Walgreens Boots Alliance missed Wall Street earnings expectations Wednesday, sending shares south by more than 3% in premarket trading.

Here’s what Walgreens reported for its fiscal first quarter ended Nov. 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $1.37 adjusted, vs. $1.41 expected
  • Revenue: $34.34 billion, vs. $34.6 billion expected

Walgreens is maintaining its outlook for the year of “roughly flat” adjusted earnings per share growth despite a soft first quarter, CEO Stefano Pessina said in the earnings release.

“We are confident our strategic plans are the right ones to drive long-term sustainable growth going forward,” Pessina said.

On an unadjusted basis, Walgreens’ fiscal first-quarter net income fell 24.8% to $845 million, or 95 cents per share, from $1.12 billion, or $1.18 per share, a year earlier.

Excluding currency exchange rates and other items, Walgreens earned $1.37 per share, below the $1.41 analysts surveyed by Refinitiv expected.

Same store sales increased by 1.6% compared to the same period a year earlier.

The pharmacy chain remains under pressure as more consumers shop online for drugstore staples such as shampoo and vitamins. Insurers are also squeezing pharmacies, paying them less to fill prescriptions.

In response, Walgreens is slashing costs. The company aims to trim more than $1.8 billion by fiscal year 2022.

Pessina said that the company is “satisfied with the progress” made by its cost-cutting program.

Its cost-cutting program caused a 55% slide in profit during its fiscal fourth quarter as it spent more to shutter unprofitable locations, the company said when it reported those earnings Oct. 28. Excluding those expenses, currency exchange rates and other items, Walgreens beat earnings expectations by 2 cents per share.

Walgreens has a market cap of $52.6 billion as of Tuesday’s close.

Read the full earnings release here.

-CNBC’s Angelica LaVito contributed to this report.

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