Walgreens (WBA) quarterly results are the latest sign that American consumers are increasingly interested under pressure.
Shares of Walgreens Boots Alliance fell 24% Thursday after the retail pharmacy chain lowered its full-year forecast due to challenging pharmaceutical industry trends and a “worse than expected” consumer environment, with management citing “a sustained decline” in discretionary spending.
“In the U.S. retail pharmacy industry, we are seeing continued pressure on the American consumer. Our customers have become increasingly selective and price-sensitive in their purchases,” CEO Tim Wentworth told analysts on the company’s earnings call Thursday morning.
The company is the latest retailer to call for a more cautious consumer in an environment of persistent inflation and high interest rates. The drugstore chain’s quarterly report comes as the Federal Reserve weighs when and how quickly to start cutting interest rates. Any cracks in the economy could prompt the central bank to act sooner rather than later. Its most recent prediction was for cutting This year.
Walgreens expects adjusted earnings per share for the year to be between $2.80 and $2.95, down from its previous forecast of $3.20 to $3.35.
A tough consumer environment has prompted Walgreens to lower prices in health and wellness, personal care and seasonal products categories.
Jeff Jonas, portfolio manager at Gabelli Funds, told Yahoo Finance that he expects other pharmaceutical companies like CVS (CVS) to address similar consumer headwinds.
“With higher prices at the pharmacy, consumers are not paying that anymore. They’re going to Amazon, Costco or Walmart. So that’s forcing pharmacies to cut prices on a lot of these items in-store, which directly hurts profit margins.
Retail sales data for May showed that the pace of consumer spending cools down compared to last year, a sign that high interest rates and inflation are weighing on consumers.
Last month, Home Depot CEO reported The home improvement retailer’s results were “impacted by a delayed start to spring and continued weakness in some larger discretionary projects.”
Also in May, Starbucks (SEX) action fell by almost 16% in a session after the coffee giant missed its quarterly results, with U.S. same-store sales falling 3% from Wall Street expectations of a gain of just over 2%. %.
Consumers have also become more demanding in grocery aisles, which has recently led to Lower expectations for the current quarter from meat giant Tyson Foods (TSN).
Investors will be watching for more clues on Thursday about how consumers are behaving toward Nike (OF) fourth quarter financial results expected after the bell.
Ines Ferre is a senior economics reporter for Yahoo Finance. Follow her on @ines_ferre.
