Walgreens Boots will close stores and layoff employees in the UK as Q3 Earning Falls Below Forecast
Walgreens Boots Alliance (WBA)
Walgreens Boots Alliance reported earnings per share of 83 cents, adjusted, compared to the expected $1.17. Its reported revenue was $34.63 billion compared to the expected $34.36 billion, according to Refinitiv data.
Walgreens posted that adjusted earnings for its fiscal third quarter, three months ending in May, were fixed at 83 cents per share, down 43.5% from the same period a year ago. The company said its revenues, rose 0.1% from last year's $34.6 billion, falling short of analysts’ forecast of $34.35. While giving its outlook for the rest of the financial year, the company said it sees adjusted earnings in the UK region of $4.65 per share to $4.75 per share.
Also, Walgreens posted a net loss of $1.71 billion, or $1.95 per share for the third quarter, compared with the earnings of $1.03 billion, or $1.13 per share, from a year ago.
Wallgreens Employee layoff plan
The company’s third quarter’s biggest hit came from the United Kingdom region and has unveiled its plan to lay off about 4,000 of its employees. The company also plans to cut 48 of its optician centers. In total, Walgreens will be cutting off 7% of its workforce in both parts of the company.
“Prior to the pandemic our financial performance for fiscal 2020 was on track with our expectations. However, this unprecedented global crisis led to a loss in the quarter as stay-at-home orders affected all of our markets,” CEO Stefano Pessina said. “Shopping patterns are evolving even more rapidly than ever as consumers further embrace digital options …”
Following the announcement of Walgreens’ third-quarter report, its shares were down 5.7% in early trading, only to change hands at $39.92 per share, extending the stock’s year-to-date gain to nearly 35%. By the close of Thursday trading, Walgreens’ shares were down nearly 9%.
Walgreens stored in the U.S. performed better compared to its UK counterpart. The company said it expects its U.S. business to have stronger sales in the following quarter, although there are possibilities that margins will be squeezed due to coronavirus-related factors.
The company said sales rose slightly from $34.59 billion to $34.63 billion, a year earlier. According to the company, the Covid-19 caused sales to be between $700 million to $750 million lower in the third quarter. This happened mostly at the sales decline of its international stores.
Walgreens said it is raising its annual cost-savings target to over $2 billion by 2022. The company’s leaders also said that the company will double down its existing strategies which consist of digital investments and focus on including health care services to its stores.
Walgreens Boots Alliance Inc
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