The theory was that Walgreens Boots Alliance (WBA) would actually benefit from the coronavirus pandemic as consumers stocked up at the drugstore chain in preparation for the coronavirus shelter-in-place orders now becoming common in the United States and Europe.
But today, April 2, the company reported a steep drop in U.S. same-store sales dating from the last week of March. The company said retail sales in the United States dropped after March 21. Retail sales at the company’s United Kingdom stores have plunged 65% in the last 10 days. In current trends continue, the company said, it will give back all the revenue gains from the early bump in sales as consumers stocked up.
For the fiscal second quarter as a whole Walgreens earned $1.52 per share, beating estimates of $1.46 a share from Wall Street analysts. For the full 2020 year the company had previously forecast flat revenue. The company said it will revisit its guidance for the third quarter.
Shares of Walgreens fell 6.30% to close at $40.32.
The company’s report and the market reaction could set the pattern for the upcoming first quarter earnings season that starts on April 14 with reports from the big U.S. banks. Walgreens results suggest that revenue and earnings for the first quarter that ended on March 31 for most companies could well have held up very well since much of the damage from the coronavirus economic recession would only be felt in the last few weeks of the period. Selling of shares, however, would be likely on guidance that projected a drop in revenue for the April-June period.
