This article was originally published on ETFTrends.com.
Walgreens Boots Alliance Inc trimmed its earnings expectations for the fiscal year following its most challenging quarter since the 2014 merger with Alliance Boots.
On Tuesday, Walgreens reported adjusted earnings of $1.64 per share during its fiscal second quarter, missing Wall Street estimates of $1.72 per share, according to data compiled by Refinitiv. In addition, Walgreens missed on revenue, coming in at $34.53 billion with analysts expecting $34.56 billion.
Walgreens reported less revenue stemming from prescription drugs, citing pressure from insurers to reduce reimbursements to pharmacies, which fed into lower prices. This was compounded by a weak cold and flu season as well as a decline in the sales of tobacco products.
These challenges saw profit fall 14 percent to $1.16 billion during its fiscal second quarter, which ended Feb. 28.
“This has been a disappointing quarter and I am equally disappointed that we have had to reduce our guidance,” Walgreens Chief Executive Stefano Pessina said in a call with analysts on Tuesday.
“We will respond quickly to ensure we return to growth,” added Mr. Pessina.
For its current fiscal year, Walgreens expects adjusted earnings per share to remain steady, which is lower than its previous guidance for 7 percent to 12 percent growth.
Walgreens is also facing stiff competition from Amazon after its acquisition of online pharmacy PillPack last year. Analysts were forecasting that the online retailer's foray into the drugstore market wouldn't bode well for competitors, such as Walgreens, CVS Health and Rite Aid.
"A number of the trends we had been expecting and preparing for impacted us significantly more quickly than we had anticipated," Pessina said.
“We are going to be more aggressive in our response to these rapidly shifting trends,” he added.
ETFs to Consider
Does the guidance by Walgreens suggest broader weakness in consumer discretionary staples that feed into the defensive sector?
For investors looking for continued upside in U.S. cyclical sectors over defensive sectors, the Direxion MSCI Cyclicals Over Defensives ETF (RWCD) offers them the ability to benefit not only from cyclical sectors potentially performing well, but from their outperformance compared to defensive sectors.
Conversely, if investors believe that U.S. defensive sectors will outperform cyclical sectors, the Direxion MSCI Defensives Over Cyclicals ETF (RWDC) provides a means to not only see defensive sectors perform well, but a way to capitalize on their outperformance compared to cyclical sectors.
For more market trends, visit ETF Trends.
POPULAR ARTICLES AND RESOURCES FROM ETFTRENDS.COM
- SPY ETF Quote
- VOO ETF Quote
- QQQ ETF Quote
- VTI ETF Quote
- JNUG ETF Quote
- Top 34 Gold ETFs
- Top 34 Oil ETFs
- Top 57 Financials ETFs
- Using Merger Arbitrage as a Hedge Against Market Volatility
- A Better Way to Determine Risk Exposure for Growth ETF Investors
- Report Findings Highlight Fake Bitcoin Trading on Unregulated Exchanges
- How to Manage A Mature Bull Market With Macro-Themed ETF Strategies
- In the Know: Building a Low Cost, Defensive Portfolio