Walgreens Boots Alliance Inc.’s stock fell almost 8% during Thursday’s extended trading session after the struggling specialty retailer suspended its quarterly payout.
The pharmacy division of Walgreens (WBA) has seen lower prescription drug reimbursement rates, competition from online behemoths like Amazon.com Inc. (AMZN), and a decline in foot traffic at its locations due to a shift to online shopping.
In light of its long-term recovery initiatives, the firm said Thursday that management is still working to “evaluate and refine” the chain’s capital allocation policy. According to the company, the dividend halt is intended to strengthen Walgreens’ balance sheet by lowering debt and enhancing free cash flow.
As part of its recovery effort, Walgreens said in October that it would close around 1,200 shops over the following three years. Approximately 500 of those locations are scheduled to close in fiscal 2025.
With a 64% decline, the company’s stock was the worst-performing asset on the S&P 500 index SPX last year. However, the stock has rebounded this year, rising by about 23%, while the index has advanced by 3.2%.
Although Walgreens posted another quarterly loss earlier this month, investors were encouraged by the company’s performance, which above adjusted projections, and it stated that it will continue to concentrate on its recovery.
