Walgreens announced plans to close many underperforming stores across the U.S. Profitability and declining margins are ongoing challenges.
This move is part of Walgreens' multi-year optimization program. CEO Tim Wentworth told The Wall Street Journal that a "meaningful percent" of the over 8,700 stores will close.
Shares tumbled in pre-market trading on Thursday. The company cut its 2024 profit forecast. Over the past year, shares have dropped over 45%.
"We continue to face a difficult operating environment," Wentworth said. "Persistent pressures on the U.S. consumer and marketplace dynamics have eroded pharmacy margins."
Sales at stores open for at least a year slipped 2.3% compared to last year. Walgreens blames this on a challenging retail environment. Increased promotional activity and higher shrink levels also hurt margins.
The company now expects fiscal 2024 earnings of $2.80 to $2.95 per share. This is down from the previous estimate of $3.20 to $3.35 per share.
This change reflects challenging pharmacy industry trends. A worse-than-expected consumer environment also plays a role, according to the company.
Despite headwinds, international and U.S. healthcare segments performed well. "We are focused on improving our core business: retail pharmacy," Wentworth said. "We are addressing critical issues with urgency and working to unlock growth opportunities."