Walgreens hit by end of Covid fear, wary shoppers
The drug store giant's earnings and guidance were hit by a major slowdown in Covid-19 vaccine demand and weaker sales of testing kits. But consumers are cautious overall.
Want more evidence that consumers are now far more worried about the health of the economy than their own personal health? Look no further than Walgreens’ latest earnings.
The drugstore giant reported results that missed forecasts and a weak outlook as shoppers bought far fewer Covid-19 testing kits and came into the company’s clinics less frequently for vaccines. Walgreens said only 800,000 people came in for Covid shots during the current quarter, compared to 4.7 million a year ago.
Shares of Walgreens, a Dow component, tumbled 9% on the news and are now down more than 20% this year. Rival CVS fell 1.5%. Rite Aid, which will report earnings on June 29, plunged 11%.
But weaker demand for Covid vaccines and test kits aren’t the only problem for Walgreens and its competitors. The American consumer in general is pulling back. Walgreens said in its earnings report that one of the other reasons for its poor outlook was due to “a more cautious macroeconomic forward view.”
CEO Rosalind Brewer added that consumers are more “cautious and value-driven” and that the weaker forecast “takes an appropriately cautious forward view in light of consumer spending uncertainty.”
For now, investors remain hopeful that the US will avoid a recession. After all, the jobs market is still in good shape and the housing market appears to be making a comeback. But it’s clear that consumers are nervous and are trying to save money. That might be one reason why discount retailers like TJX, the owner of TJ Maxx and Marshalls as well as furnishings chain HomeGoods, is now trading at an all-time high.