Walgreens Boots Alliance on Tuesday reported earnings that tumbled from the same time a year ago amid softening consumer spending and a pullback in demand for Covid vaccines.
The pharmacy chain posted earnings for its fiscal third quarter of $118 million, or 14 cents a share, compared to $289 million, or 33 cents a share a year ago.
Shares of the company fell close to 10% Tuesday.
The company also slashed its full-year guidance to $4.00 to $4.05 a share from $4.45 to $4.65 previously, citing "challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes."
"Our revised guidance takes an appropriately cautious forward view in light of consumer spending uncertainty, while still demonstrating clear drivers of a return to operating growth next fiscal year," CEO Rosalind Brewer, said in a statement.
She said Walgreens was increasing its cost-savings efforts to $4.1 billion and "taking immediate actions to optimize profitability for our U.S. Healthcare segment." I am confident that our turnaround strategy positions Walgreens to drive sustainable core growth and deliver long-term shareholder value."
The company said its retail pharmacy sales in the US came in at $27.9 billion, up 4.4% from a year ago and comparable sales (or sales at stores open at least a year) for the segment were up 7% compared to a year ago.
Its pharmacy sales increased 6.3% in the period versus a year ago, while comparable pharmacy sales increased 9.8%, boosted by higher prices of branded medication.
But the volume of Covid vaccines administered in the quarter plummeted to 0.8 million, compared to 4.7 million a year ago.
Outside of pharmacy products, Walgreens reported retail sales fell 1% and comparable sales decreased 0.2% in the quarter. Excluding tobacco, comparable retail sales increased 0.2%, led by purchases of grocery, household and beauty items.
Walgreens is also experimenting with newer store formats, including one in Chicago where most of the merchandise is intentionally kept out of sight. The store, located on 2 East Roosevelt Road, at one point offered a typical Walgreens shopping experience -- multiple aisles stacked with daily essentials, cosmetics, packaged snacks, health care needs and an in-store pharmacy.
The same location earlier this month reopened with a dramatically pared back look. Walgreens says it's a digital-first experimental store to benefit customers. It's not designed to deter theft, Walgreens says.
But retail experts say keeping all merchandise out of reach sure is an effective way to combat rising incidents of shoplifting.
Retail analyst Neil Saunders, managing director at Global Data, called the store an "extremely unfriendly, utilitarian concept that has been informed by the needs of Walgreens to reduce theft and labor costs rather than by serving customers."
"Our research and visits to the store reveal a lackluster reception from both shoppers and staff," said Saunders in a note Tuesday.