Walgreens Stock Plummets to 27-Year Low in 2025 Amid Weak Consumer Demand and Profit Shortfalls
In 2025, Walgreens Boots Alliance faces a sharp decline in stock value as the pharmacy giant reports disappointing profits and lowers its outlook due to ongoing challenges in consumer spending and pharmacy margins.
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Highlights
- Walgreens Boots Alliance’s Q3 2024 profits missed expectations, prompting a lowered full-year earnings forecast amid a tough market environment.
- The company plans strategic shifts within its U.S. Healthcare division, including the closure of underperforming stores to streamline operations.
- Shares dropped to their lowest since 1997, reflecting significant investor concern.
In 2024, Walgreens Boots Alliance (WBA) saw its stock plunge to a 27-year low following a Q3 earnings report that fell short of analyst predictions. The retail pharmacy and healthcare leader faced weak consumer demand, resulting in a sharp profit miss and revised guidance that dampened investor sentiment.
Walgreens reported adjusted earnings per share (EPS) of $0.63 for Q3, below forecasted figures. Despite a 2.6% increase in revenue to $36.4 billion year-over-year, the gains were insufficient to offset margin pressures.
Within its U.S. Retail Pharmacy segment, revenue increased by 2.3%, driven by a 4.4% rise in pharmacy sales due to higher drug prices and prescription volumes. However, margins were squeezed by changing brand mixes and reimbursement challenges.
Retail sales declined by 4.0%, attributed to a difficult retail landscape and shifting consumer channels, compounded by intensified promotional activities and increased theft. Conversely, U.S. Healthcare sales surged 7.6%, and international revenues grew by 2.8%.
CEO Highlights Challenging Market Conditions
CEO Tim Wentworth emphasized the ongoing 'difficult operating environment,' citing persistent U.S. consumer pressures and unfavorable pharmacy industry trends eroding profitability.
As a result, Walgreens lowered its full-year adjusted EPS guidance to a range of $2.80 to $2.95, down from an earlier forecast of $3.20 to $3.35.
The company is undertaking a strategic review, focusing on simplifying the U.S. Healthcare portfolio and planning the closure of select underperforming stores. Wentworth indicated that a significant portion of unprofitable locations could be shuttered over the coming years.
Following the announcement, Walgreens Boots Alliance shares dropped approximately 25% to $11.79 by mid-morning trading, marking a steep decline exceeding 50% year-to-date.
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