Walgreens shares tumbled early Thursday after the drugstore chain signaled that more store closings are on the way, missed earnings expectations for its third quarter and cut its annual forecast.
The company said it was finishing a multiyear plan to shutter some underperforming U.S. stores, but it didn’t detail how many were targeted.
Walgreens and major competitors like CVS and Rite Aid — which is going through a bankruptcy reorganization — have already closed hundreds of stores over the past few years. The companies have dealt with challenges that include years of tight reimbursement for their prescriptions and rising costs for running their locations.
Plus, analysts say they’ve also been hit by growing competition from Walmart, Amazon and other discount retailers over sales of goods sold outside their store pharmacies. Consumers also tend to grow more price-conscious when inflation rises.
Walgreens also has been closing VillageMD primary care clinics it had been installing next to its stores in order to grow its presence as a health care provider.
Chief Executive Tim Wentworth said in a statement that the company continues to face challenges that include “persistent pressure on the U.S. consumer.” Wentworth, who joined the company last fall, has been conducting a review of its business.
Walgreens Boots Alliance Inc. runs about 12,500 drugstores worldwide, including more than 8,600 locations in the United States.
The company said it earned $344 million in its fiscal third quarter, with adjusted results totaling 63 cents per share. Revenue rose nearly 3% to $36.35 billion.
Analysts were looking for earnings of 68 cents per share on $35.9 billion in revenue, according to FactSet.
Walgreens also said it now expects adjusted earnings to range from $2.80 to $2.95 for its fiscal year, which ends in August. That’s down from a forecast of $3.20 to $3.35 per share that it had narrowed in March.
Analysts expect $3.20 per share.
That guidance cut was not “overly shocking to us as the company now begins the next leg of its turnaround,” Leerink Partners analyst Michael Cherny said in a research note.
But the overall results surprised investors. Shares of the Deerfield, Illinois, company sank nearly 16% to $13.20 in premarket trading.