Shares in the US owner of Boots have fallen by 25pc after the pharmacy chain surprised investors with worse than expected results, fuelled by challenging conditions in America.
Walgreens Boots Alliance, which has been exploring the sale of Boots, said it was finishing a multi-year plan to shutter some underperforming US stores, but it didn’t detail how many were targeted.
Walgreens and its major American competitors such as CVS and Rite Aid – which is going through a bankruptcy reorganisation – have already closed hundreds of stores over the past few years. The companies have dealt with challenges that include years of low margins on prescriptions and rising costs for running their shops.
Analysts say they have also been hit by growing competition from Walmart supermarkets, Amazon and other discount retailers over sales of non-prescription products.
Tim Wentworth, chief executive, said that the company continues to face challenges that include “persistent pressure on the US consumer.”
Walgreens Boots Alliance runs about 12,500 pharmacies worldwide, including more than 8,600 locations in the United States. Boots has 2,100 stores in the UK.
Mr Wentworth said that “changes are imminent” for about 25pc of the company’s US stores, which could include closing of a “significant portion” of them.
The company said profits were $344m (£272m) in the three months to May 31. Walgreens told investors that earnings per share were down 36.6pc, and cut its profit guidance for the year.
That guidance cut was not “overly shocking to us as the company now begins the next leg of its turnaround,” Leerink Partners analyst Michael Cherny said.
In the UK, Boots’ management is understood to have been pushing Walgreens toward an initial public offering (IPO) for the British pharmacy business, which would mark a return of the company to the London Stock Exchange.
An IPO of Boots would be expected to value it at around £7bn, meaning it would return the company to the FTSE 100.
The plunge in Walgreens shares was the biggest one-day decline in since at least 1980, according to Bloomberg research.
