By TOM MURPHY
AP Health Writer
Walgreens is kicking off its year much as it ended its last, with a big earnings plunge.
The drugstore chain said Wednesday that first-quarter net income dropped nearly 25% in a performance that fell short of Wall Street expectations. Revenue also inched up less than 2% for the drugstore chain, which is going through a cost-cutting program and developing partnerships with other companies to bring in more business.
Walgreens earned $845 million in the quarter that ended Nov. 30, while revenue grew to $34.34 billion. Earnings adjusted for one-time items totaled $1.37 per share.
Analysts expected, on average, earnings of $1.41 per share on $34.58 billion in revenue, according to FactSet.
Walgreens and other drugstores have been hit by challenges that include reimbursement cuts for prescriptions and growing competition from online options like Amazon.com. That has eaten into sales at the front end of their stores, or the areas outside the pharmacy.
The company said in October that its fiscal fourth-quarter earnings had tumbled 55%, and it raised its annual savings target from its cost-cutting program to $1.8 billion by fiscal 2022, up from a previous goal to exceed $1.5 billion.
Executive Vice Chairman and CEO Stefano Pessina said in a prepared statement that the company was satisfied with the progress they’ve made so far in that program and with Walgreens’ cash flow. Walgreens recorded $1.1 billion in net cash from operating activities in the quarter.
Walgreens Boots Alliance Inc. reaffirmed a forecast it made last fall for roughly flat earnings compared to fiscal 2019, when it posted adjusted earnings of $5.99 per share.
Analysts expect, on average, adjusted earnings of $5.93 per share, according to FactSet.
Nothing in the company’s first-quarter numbers indicates that Walgreens is building momentum, said Neil Saunders, managing director of GlobalData Retail.
“They suggest that 2020 will largely be a year of treading water and slow progress,” he said.
Shares of the Deerfield, Illinois, company dropped 6%, or $3.54, to $55.75 in premarket trading.
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