Walgreens cuts 2024 profit forecast, announces store closures

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

Shares of the Illinois-based company fell more than 15% in premarket trading, after having declined 40% for the year so far.

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 and its review was focused on a quarter of its U.S. locations.

Walgreens could shutter a “meaningful percent” of the stores being reviewed over the next few years, CEO Tim Wentworth said in an interview to the Wall Street Journal.

The company did not immediately respond to a Reuters request for comment about details on store closures.

Investors are banking on 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 due to reduced spending from inflation-weary consumers and weak COVID product sales.

Walgreens is also aiming to simplify its healthcare portfolio in the country, which includes primary care provider VillageMD.

Wentworth told WSJ 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 now expects an adjusted profit of $2.80 to $2.95 per share for its financial year ending August, compared with its $3.20 to $3.35 per share forecast in March.

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

On an adjusted basis, the company reported 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)

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