Walgreens shares pull back after initial post-earnings gains

FAN Editor

Walgreens Boots Alliance shares pared initial gains Thursday morning as investors dug into the company’s third-quarter earnings results.

The drugstore chain posted revenue of $34.33 billion, topping analysts polled by Thomson Reuters’ estimates of $34.05 billion. In the quarter, Walgreens said its net income was $1.34 billion, or $1.35 per share. After stripping out items, Walgreens earned $1.53 per share beating expectations of $1.48 per share.

The company announced a $10 billion share buyback, helping boost the new Dow Jones Industrial Average component Walgreens’ stock more than 1 percent in premarket trading. But the stock turned negative as investors dove deeper into the results.

“Man, if you look at the same-store numbers both in the U.S. and the U.K., pharmacy was flat, retail on the front end in the U.S. was down five (percent), and the international retail numbers were negative,” Raymond James analyst John Ransom told CNBC’s “Squawk Box.” “Their small wholesale division was the only division that posted positive same-store constant currency.”

In the quarter, Walgreens’ comparable pharmacy sales in the U.S. were flat compared to the year-ago quarter. The company said prescription brand inflation was offset by reimbursement pressure and generic drugs.

Comparable retail sales in the U.S. slid 4 percent in the quarter. Drugstores have struggled to keep up as Amazon and other retailers steal away consumers who can find the same items, often at less expensive prices.

Walgreens’ gross margin decreased to 22.9 percent in the quarter from 24.2 percent in the same time last year, falling short of analysts’ polled by FactSet’s expectations of 23.5 percent. Its adjusted operating margin dipped to 5.3 percent from 6 percent, shy of the consensus estimate of 5.7 percent.

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