Walgreens executives said penny-pinching customers hunted for discounted items, shunning normal-priced consumer health products. — Reuters
LONDON: Walgreens Boots Alliance has warned that lower spending by inflation-weary consumers and a hit from a larger-than-expected drop in Covid-19 product sales may persist into next year, sending its shares down 9%.
The end of the Covid emergency in May led to a steep drop in Covid vaccines and testing, Walgreens executives said, while penny-pinching customers hunted for discounted items, shunning normal-priced consumer health products.
“Very few people are getting either rapid tests or the actual polymerase chain reaction or PCR nasal swab tests,” said Gabelli Funds portfolio manager Jeff Jonas.
Walgreens’ shares were at the lowest in more than 11 years after the company slashed its profit forecast for the year.
The forecast cut dragged shares of Rite Aid by nearly 12%, while shares of larger rival CVS Health were down 1.8%.
“Similar to other retailers, we’ve been impacted by the rapid softening of the macro environment and a more cautious and value-driven consumer,” Walgreens chief executive officer Rosalind Brewer told investors.
The company said on its conference call it now plans to close 300 additional locations in the United Kingdom and 150 in the United States. It has around 13,000 locations across the United States, Europe and Latin America.
Brewer said higher inflation rates, lower tax refunds and other macroeconomic issues were causing consumers to pull back on discretionary spending.
“I think there’s some execution issues there, too. I still think they’re learning how to target their promotions better and maximize their loyalty card,” said Jonas. — Reuters
