Walgreens Boots Alliance stock fell slightly in pre-market trading Thursday, after the pharmacy giant posted second-quarter earnings that beat Wall Street expectations but warned of a “challenging” retail environment.
The stock, which has lost more than 20% so far this year, was down about 2% before markets opened. It recovered to trade slightly up by mid-morning. Walgreens stock has largely underperformed in recent years, in part due to financial and macro-environmental challenges.
Walgreens CEO Tim Wentworth said Thursday that the company is continuing “to operate in a challenging retail environment.”
Despite the woes, Walgreens breezed by Wall Street forecasts. The company generated quarterly revenue of $37.05 billion, or about $1.20 earnings per share. Analysts had predicted the retailer would record revenue of $36.48 billion, about $0.82 cents per share.
The second largest pharmacy store chain operator reported a loss of $5.91 billion in its fiscal second quarter, led in part by dozens of closures of its primary care provider VillageMD.
Walgreens has been stifled by stubbornly elevated inflation as consumers hunt for bargains. The company’s profits have been pummeled for years by falling reimbursement rates that pharmacy-benefit managers pay the retailer.
That’s put Walgreens in a tough spot as it simultaneously deals with a years long restructuring strategy, which Wentworth said would be a priority when he took over the company. Wentworth was previously president of insurance company Cigna, working in its Evernorth division, one of the company’s pharmacy benefit-manager units.
It’s been an uphill battle.
In February, Walgreens was booted off of the Dow Jones Industrial Average. The pharmacy giant was replaced by Amazon. Earlier this month, the company said it would close distribution centers in Florida and Connecticut, laying off about 600 employees. Walgreens said the move was made “in order to streamline capacities” to support its stores.
And Walgreens said earlier this year that it would slash its stock dividend by almost half to improve its balance sheet and free up cash to spend on its pharmacy and health care businesses.
Deerfield, Illinois-based Walgreens narrowed its full-year adjusted earnings per share guidance. The pharmacy chain said it expects earnings per share to be between the range of $3.20 to $3.35.