Walgreens Cuts Earnings Forecast and Closes Stores Under New CEO

Walgreens Cuts Earnings Forecast and Closes Stores Under New CEO

Elena Rossi
2 min read

Walgreens Faces Financial Pressure and Plans Store Closures

Walgreens Boots Alliance has revised its earnings forecast downward and announced intentions to shut down more stores due to challenging retail conditions. The company's newly appointed CEO, Tim Wentworth, is striving to navigate these difficulties. Walgreens now anticipates full-year adjusted earnings to range between $2.80 and $2.95 per share, a decrease from previous projections. Shares nosedived by 16% before the market opening. Concurrently, a $431 million setback was incurred on its international Boots chain, leading to an evaluation of potential business strategies. As part of its strategic shift towards healthcare, the company is committing substantial investments to primary care through VillageMD. Despite these efforts, profits have been impacted, necessitating a $1 billion cost-cutting initiative that includes store closures. Notably, its health-care unit, encompassing VillageMD, exhibited stronger growth compared to its traditional pharmacy business. However, the company is closing 160 clinics and has accounted for a $5.8 billion write-down associated with VillageMD. The U.S. retail pharmacy unit experienced a modest revenue increase of 2.3%.

Key Takeaways

  • Walgreens has adjusted its full-year earnings projection to $2.80-$2.95 per share.
  • The company has announced substantial store closures and additional organizational changes.
  • Prior to market opening, shares plummeted by 16%; CVS shares also observed a 3% decline.
  • Walgreens has incurred a $431 million write-down on its international Boots chain.
  • The company is directing its focus towards healthcare with primary care provider VillageMD, despite recent write-downs.


Walgreens' strategic transition to healthcare under the leadership of CEO Tim Wentworth is encountering challenges amidst ongoing retail adversities. The downward revision in earnings and store closures indicate financial strain, impacting shareholders and provoking concern amongst competitors such as CVS. The substantial write-downs on Boots and VillageMD underscore the risks associated with international ventures and healthcare investments. In the short term, the company's stock and retail sector confidence will be negatively affected, while successful integration into the healthcare sector could potentially stabilize future earnings. Despite implementing cost-cutting measures to offset losses, skepticism from the market prevails.

Did You Know?

  • Write-down:
    • A write-down is an accounting procedure that reduces the value of an asset to reflect its current market value, which is lower than its original or book value. The $431 million write-down on Walgreens' international Boots chain indicates that the company has acknowledged the decreased value of this asset, potentially due to underperformance or other market factors.
  • Primary Care Provider (PCP):
    • A primary care provider (PCP) is a healthcare professional who serves as the initial point of contact for patients seeking medical attention. PCPs offer various services including preventive care, diagnosis, and treatment of common illnesses, and often collaborate with specialists when necessary. VillageMD, the entity in which Walgreens is making significant investments, serves as an example of a primary care provider focusing on delivering comprehensive healthcare services.
  • Cost-Cutting Plan:
    • A cost-cutting plan is a strategic initiative undertaken by a company to reduce its expenses, aiming to improve profitability or manage financial challenges. Walgreens' $1 billion cost-cutting plan encompasses store closures and other measures to streamline operations and reduce overhead. This strategy is commonly employed during challenging economic circumstances or when a company faces financial pressures.

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