Walgreens Boots Alliance Adjusts FY24 Earnings Outlook Amid Challenging Retail Climate

Key Points

• Walgreens Boots Alliance beats Q2 sales expectations but narrows FY24 EPS guidance; WBA faces a significant net loss due to a goodwill impairment charge; The company aims for $1 billion in cost savings amid a challenging retail environment.

In this news

Walgreens Boots Alliance (WBA) has reported its fiscal second-quarter sales, surpassing Wall Street's expectations, yet the company has adjusted its fiscal 2024 adjusted profit guidance, narrowing the higher end. This adjustment is attributed to a challenging retail environment in the U.S. Despite the positive sales growth, WBA faced a substantial net loss for the quarter, primarily due to a significant goodwill impairment charge related to its primary-care provider VillageMD.

In response to the retail challenges, CEO Tim Wentworth highlighted the company's commitment to customer engagement and value. WBA remains confident in its ability to achieve $1 billion in cost savings for the year. The company is also actively reviewing its portfolio to drive growth and deliver value. The revised EPS guidance for FY24 is now set at $3.20 to $3.35, reflecting the impact of the challenging retail environment, the early wind-down of a sale-leaseback program, and lower overall earnings from Cencora share sales. However, these factors are expected to be balanced by strong execution in pharmacy services and a lower adjusted effective tax rate.

The market reacted to the news with a slight decline in WBA shares, which fell 2.66% in premarket trading. The narrowed financial outlook, coupled with the recent net loss, has prompted investors to reassess the company's stock. Analysts maintain a Hold consensus rating on Walgreens, with an average price target that suggests a potential upside. The company's strategic actions in the coming months will be crucial in determining its ability to navigate the retail headwinds and achieve its financial targets.