Walgreens announces losses of $ 1.7 billion if customers stay at home or limit shopping during COVID-19
The coronavirus pandemic brought Walgreens to a loss of $ 1.7 billion in the most recent quarter of the pharmacy chain, with customers staying at home or limiting shopping to essentials from grocery stores.
The company said on Thursday that the fast-spreading virus took out between $ 700 and $ 750 million from sales, with much of the damage coming from outside the US.
More companies of all sizes will disclose details of their financial performance over the past three months as COVID-19 seized economies in Europe, as well as North and South America.
The coronavirus pandemic brought Walgreens to a $ 1.7 billion loss in the most recent pharmacy chain, with customers staying at home or limiting shopping to essentials from grocery stores
Walgreens said the rapidly spreading coronavirus took off between $ 700 and $ 750 million from sales, with much of the damage coming from outside the U.S. Employees are shown operating a COVID-19 testing center outside one of the Dallas chain stores
Walgreens’ quarter ended May 31, and included a three-month period when consumer activity stalled.
During that time, the chain lost over 16,000 workers at the height of the pandemic in the UK. Sales in the Boots stores there decreased by nearly 28 percent on a constant currency basis. Pedestrian traffic in April fell by 85 percent.
While stores remained open to provide pharmacy services, Boots’ more profitable beauty and fragrance counters were closed.
Industry analysts had expected significant earnings gains, but the magnitude of the loss exceeded those expectations. Shares of the company, trading as the Walgreens Boots Alliance, fell 9 percent, near a new low for the year.
The company declined $ 3.28 to $ 39.01 on Thursday due to news of the chain’s disappointing third-quarter earnings and weak earnings forecast.
Walgreens posted non-cash impairments of $ 2 billion in the quarter because of Boots’ operating loss and continued uncertainty about how long the pandemic will last. The burden illustrated “a marked deterioration in the value of assets,” said Neil Saunders, CEO of GlobalData Retail, in a research note.
Walreens fell $ 3.28 to $ 39.01 due to news of the chain’s disappointing third-quarter earnings and weak earnings forecast
The outlook for Walgreen’s “UK business” is now considerably bleaker than at the beginning of the year, “Saunders wrote.
The pandemic accelerated planned changes to the Boots stores, including closing optics locations and cutting staff at the UK support office. Those changes could lead to job losses of over 4,000.
Walgreens posted a quarterly profit of 83 cents per share. Revenue grew less than 1 percent to $ 34.63 billion.
Analysts expected earnings per share of $ 1.19 and sales of approximately $ 34.3 billion, FactSet said.
Based in Deerfield, Illinois, the company has more than 9,200 stores in the United States and more than 18,750 stores internationally.
Business in the US was clearly better than in the UK. Established store sales were up 3 percent from last year, and the number of recipes increased slightly.
Business in the US was noticeably better than the UK for Walgreens, where sales in established stores were up 3 percent from last year, and the number of recipes was up slightly. Shown are customers entering and leaving a store in New York
However, regions in the US, especially in the south and west, are gripped by a wave of COVID-19 infections. Governors impose restrictions that could limit the mobility of potential customers and create more anxiety about being in stores with others.
Walgreens said this week that it will make a major change to some of its US stores. It will add as many as 700 clinics staffed by physicians in the coming years to play a greater role in managing client health.
The drugstore chain drew up a forecast for the current fiscal year on Thursday, which ends in August. Walgreens expects an adjusted profit from $ 4.65 to $ 4.75 per share, an estimate that includes the expected impact of COVID-19.
Analysts had expected earnings of approximately $ 5.71 per share, according to FactSet.