Walgreens Boots Alliance announces $1.8 billion in cost-cutting following worse than expected performance in the first quarter

The American retail pharmacy company, Walgreens Boots Alliance, announced its earnings report for the first quarter that ended on November 30^th on Wednesday. Having missed the analysts’ estimates for quarterly revenue and earnings, share prices were seen losing traction in the stock market.

Dropping 5% in the stock market, the pharmacy company was last seen trading around $55.15 on Wednesday. Later in the week on Thursday, it extended the decline and closed the day at around $54.68. The $48.56 billion company remained challenged in the stock market in 2019. Having opened the year at $72.49 in January 2019, the stock ended the last year at a much lower $59 in December.

Walgreens Boots Alliance Missed Analysts Estimate For EPS And Revenue In Q1

Based on Refinitiv data, analysts had previously highlighted their estimate of $34.6 billion for Walgreens Boots Alliance in the first quarter. Earnings per share (EPS), on the other hand, remained capped at $1.41 per share, as per the experts’ forecast. The performance results on Wednesday, however, showed the retail pharmacy to have noted a much lower $34.34 billion in revenue in the first quarter while the EPS was recorded at $1.37 per share (adjusted).

Despite the softer than expected growth in the first quarter, CEO Stefano Pessina commented that the company aims at maintaining a roughly flat outlook for the year. He further expressed confidence in the Walgreens Boots Alliance’s strategic plans that, according to him, are imperative for sustainable long-term growth in the upcoming months.

Quarterly Net Income Dropped By 24.8% For The Retail Pharmacy In The First Quarter

In a comment following the quarterly earnings report, the company stated that the worse than expected prescription volume was the largest shock for Walgreens Boots Alliance in the first quarter. The quarterly net income (adjusted) for the company saw a massive drop of 24.8% and was recorded at $845 million. The figure was noted at a much higher $1.12 billion in the same quarter last year. Same-store sales, on the other hand, were reported 1.6% higher as compared to the last year’s first quarter.

The company also cited the rising trend of opting for online stores to shop for drugstore staples such as vitamins or shampoo to have contributed to the poor quarterly performance. In order to recover from the blow, Walgreens Boots Alliance announced its plans of slashing $1.8 billion in costs by 2022. CEO Pessina and CFO James Kehoe also expressed confidence in the company’s cost-cutting program.