Walgreens shares dive after guidance cut, stores closure plans

Walgreens Boots Alliance (NASDAQ:) saw its shares tumble 10% in premarket trading Thursday after the retail pharmacy chain reported worse-than-expected Q3 earnings and reduced its full-year guidance.

The company posted Q3 earnings per share (EPS) of $0.63, falling short of the consensus estimate of $0.71. Revenue came in at $36.4 billion, slightly above the estimated $36 billion.

Looking ahead, Walgreens now projects adjusted EPS for the year to be between $2.80 and $2.95, down from the previous forecast of $3.20 to $3.35, to reflect headwinds in the pharma industry and a deteriorating US consumer environment.

The company also plans to close a significant number of poorly performing stores and scale back its ambitious entry into the primary-care business.

CEO Tim Wentworth told the Wall Street Journal that Walgreens will close a substantial portion of its approximately 8,600 U.S. stores. Although the final number of closures has not been determined, the company is reviewing about a quarter of its unprofitable locations and could shutter a “meaningful percent” of these over the next few years.

Wentworth also mentioned that Walgreens will reduce its stake in primary-care provider VillageMD and will no longer be the majority owner. However, Walgreens will retain some of its other units and currently has no plans to sell its overseas pharmacy chain Boots or Shields Health Solutions, a specialty pharmacy firm.

Wentworth assured that the company expects to reassign staffers, so the reduction in its U.S. retail footprint won’t result in significant job losses.