(Reuters) -Walgreens Boots Alliance on Tuesday cut its profit forecast for the year on lower demand for COVID-19 tests and vaccines as well as sluggish consumer spending, sending its shares down 7.5% premarket.
The United States declared an end to the COVID public health emergency in May; while the emergency was in place, millions of Americans were eligible to receive free vaccines, tests and treatment.
Demand for tests and vaccines has fallen in recent quarters after buoying profits at pharmacy chains for a large part of the pandemic. At the same time, profits have been hit by lower consumer confidence due to high inflation.
The demand for COVID vaccines and testing has “fallen off faster than expected”, Deutsche Bank analyst George Hill said in a note ahead of the earnings.
In the third quarter of the fiscal year, Walgreens reported a 0.2% fall in same-store sales at its retail division, compared with estimates of a 2.1% rise, according to brokerage TD Cowen.
Walgreens said its forecast cut reflected “challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes”.
It added that its fourth quarter is expected to be hurt by a higher effective tax rate, decreased U.S. consumer spending and the impact of a weaker respiratory disease season, the company said.
It now expects annual adjusted earnings per share of $4.00 to $4.05, from $4.45 to $4.65 previously.
Excluding one-off items, the company reported earnings of $1 per share for the third quarter ended May 31, compared to analysts’ average estimate of $1.07 per share, according to Refinitiv IBES data.
Walgreens’ shares were down at $29.25 before the opening bell.
(Reporting by Manas Mishra and Mariam Sunny in Bengaluru; Editing by Pooja Desai)
