Walgreens Boots Alliance (WBA) -) shares moved sharply lower in early Thursday trading after the retail pharma and benefits management group slashed its quarterly dividend following a solid set of fiscal-first-quarter earnings.
Adjusted earnings for the three months ended in November came in at 66 cents, down 43% from the year-earlier period but 2 cents ahead of the Wall Street consensus forecast.
Group revenues rose 10% to $36.7 billion, topping analysts' forecasts of a $34.8 billion tally, as U.S. same-store pharmacy sales rose 8.1%.
However, Walgreens said it would halve its regular dividend, to 25 cents a share, marking the first payout reduction for the Dow component in decades.
"We didn't love having to make that decision, but we did think it was responsible," Chief Executive Tim Wentworth told CNBC Thursday. "Having capital to reinvest back into our business is the most shareholder-friendly thing we can do."
Wentworth told investors the group was on pace to meet its goal of around $1 billion in overall cost saving for the 2024 fiscal year.
"Walgreens delivered fiscal-first-quarter results in line with overall expectations, reflecting disciplined execution in a challenging consumer backdrop," he added in a statement. "We are evaluating all strategic options to drive sustainable long-term shareholder value, focusing on swift actions to right-size costs and increase cash flow, with a balanced approach to capital allocation priorities."
Walgreens shares were marked 6.2% lower in late-morning trading to change hands at $23.99 each, extending the stock's six-month decline to around 22.5%.
Looking into the current fiscal year, Walgreens reiterated that it estimated adjusted earnings in the region of $3.20 to $3.50 a share, compared with a Wall Street forecast of around $3.70. It declined to provide an outlook into 2025 and beyond.
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