Walgreens Boots Alliance Inc (NASDAQ:WBA) shares tumbled almost 10% Tuesday morning after lagging consumer spending dragged the company’s fiscal third-quarter earnings below expectations.
The retail pharmacy posted adjusted earnings of $1 per share, compared to expectations of $1.07 expected. It was Walgreens’ first such miss since July 2020.
Revenue was $35.42 billion, higher than an expected $34.24 billion and up 8.6% year-over-year.
Looking forward, the company cut its full-year earnings guidance to a range of $4 to $4.05 per share, down from its previous range of $4.45 to $4.65 per share.
Walgreens shares traded roughly 10% lower at $28.58.
CEO Rosalind Brewer attributed the disappointing results to slowing consumer spending, as well as declining demand for Covid testing and vaccines.
“Our customer is feeling the strain of higher inflation and interest rates, lower SNAP benefits and tax refunds and an uncertain economic outlook,” Brewer said. “They are pulling back on discretionary and seasonal spending and responding strongly to promotional activity,” Brewer said.
Meanwhile, Covid vaccines administered were 800,000, down from 4.7 million in the same period last year. Walgreens said it expects to deliver 9 million to 10 million in 2024, compared to 12.5 million projected vaccines in 2023.
“We had called out Covid as a wildcard heading into the quarter and have unfortunately seen less patient willingness to vaccinate,” Brewer said.
Accordingly, Brewer said the company is increasing its cost-cutting initiative to $4.1 billion, including $800 million in savings for fiscal year 2024.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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