Walgreens Boots Alliance Inc (NASDAQ:WBA) stock fell 1.24% (As on June 28, 11:18:22 AM UTC-4, Source: Google Finance) after the company slashed its full-year earnings guidance as it fell short of Wall Street expectations for its fiscal third quarter due to lower consumer spending and a drop in demand for Covid vaccines and testing. The company is increasing Walgreen’s cost-cutting initiative to $4.1 billion, which includes $800 million in savings for fiscal year 2024. The company is also working to increase profitability of its health-care segment. The booking sales were of $35.4 billion in the quarter, 8.6% higher than revenue of $32.6 billion in the same period a year earlier, due to growth in its retail pharmacy and health-care segments. Walgreens booked net profit of $118 million for the quarter, a 59% drop from the $289 million in income the company reported for the same quarter last year. The decline was due primarily to lower operating income.
Moreover, Walgreens’ U.S. retail pharmacy segment generated about $28 billion in sales for the quarter, an increase of 4.4% compared with the same period last year. Comparable sales at individual locations rose 7%. Walgreens pharmacy sales also increased 6.3% compared with the same quarter last year, with comparable sales up nearly 10% due to price inflation in brand medications. Total prescriptions filled in the quarter, including immunizations, increased by 0.1% for a total of 305 million. Covid vaccines administered during the period plummeted 83% to 800,000, down from 4.7 million in the same period last year.
WBA in the third quarter of FY 23 has reported the adjusted earnings per share of $1, missing the analysts’ estimates for the adjusted earnings per share of $1.07, based on analyst estimates polled by Refinitiv. The company had reported the adjusted revenue of $35.42 billion in the third quarter of FY 23, beating the analysts’ estimates for revenue of $34.24 billion.
The retail pharmacy chain lowered its earnings guidance to a range of $4.00 to $4.05 per share for the full year, down from its previous forecast of $4.45 to $4.65 per share. CEO Brewer said soft demand for Covid vaccines and lower consumer spending is likely to extend into next year. She said the company is closing watching the end of fiscal stimulus and resumption of student loan payments as potential headwinds.
Walgreens expects to administer 9 million to 10 million Covid vaccines in 2024, in line with a typical flu season, compared with 12.5 million projected vaccinations in 2023.